^W'^'^m^imV&^^&^'i^^'F^S^^^^  ^-i^H^- 


THE  TRUE  FUNCTION  OF  MONEY 

and 

THE  FALSE  FOUNDATION  OF  OUR 

BANKING  SYSTEM 


By 

Frederick  Raphael  Burch 


ADOLPHUS  PUBLISHING  COMPANY 

626  New  York  Block, 

Seattle,  Wash. 


Copyright,  1922 

By 

Frederick  Raphael  Birch 

All  rights  reserved 


r->^^t" 


CONTENTS 

Page 

Chapter  I,     The    Mercenary    Few 7 

II.     Banks  and  the  Banking  System... 14 

III.  The  Origin  of  Money 22 

IV,  Definitions  of   Money 28 

V,     The  Perversion  of  Money 40 

\T,     The  Fallacy  of  Interest 56 

VII.     Condition  of  Labor 66 

VIII.     Condition  of  Capital 71 

IX.     Wealth  and  Capital 81 

X.     The  Money  Question 95 

XI,     Law   and    Facts 114 

XII,     The     Remedy 128 


389215 


PREFACE 

THE  ERRONEOUS  conception  of  the  proper 
status  and  true  function  of  money  has  led  to 
its  perversion,  the  evil  result  of  which  is  so 
clearly   evidenced   by   our  present   banking   system. 

In  this  volume  I  undertake  to  prove  the  fol- 
lowing propositions: 

1st.  Money  is  not  a  commodity.  This  being 
true : 

2nd.     Money  is  no  part  of  wealth.    Hence : 

3rd.  Money  can  never  become  capital.  Not 
being  capital : 

4th.  Money  has  no  earning  power.  And  it 
follows : 

5th.     Interest,  or  profit,  on  money  is  unearned. 

6th.  Gold  and  silver,  in  common  with  lead  and 
zinc,  are  commodities. 

7th.  Money  is  something  entirely  different. 
It  has  no  more  natural  connection  with  gold  and  silver 
than  it  has  with  lead  and  zinc.  We  must  not  confuse 
money  with  the  commodity  which  may  be  chosen  as  its 
tangible  vehicle. 

8th.  Money  is  the  medium  of  exchange  and  the 
measure  of  value ;  a  convenient  and  exact  method 
of  book-keeping;  and  only  as  such  does  it  properly 
function. 

9th.     Money    is   brought    into   existence   by   law. 

10th.  A  commodity  cannot  be  created  by  law. 
All  that  a  law  can  do  is  to  function  as  a  law. 


11th.  No  individual,  nor  body  of  individuals, 
should  be  permitted  to  own  or  control  a  function  of 
law  and  charge  others  a  tax  for  its  use. 

12th.  The  government  is  the  true  depositary 
of  the  law  and  the  proper  executive  of  its  functions. 

13th.  These  powers  are  usurped  by  the  bankers 
and  money-lenders,  and  the  evil  results  of  this  usur- 
pation are  colossal ;  they  will  disrupt  and  destroy 
civilization  unless  a  remedy  be  applied. 

14th.     The  remedy. 

— Frederick  Raphael  Burch. 


CHAPTER  I 
THE  MERCENARY  FEW 

AS  WE  LOOK  back  over  the  pages  of  his- 
tory, and  contemplate  the  many  advances 
humanity  has  made  toward  intellectual  and 
industrial  freedom,  we  are  inclined  to  congratulate 
ourselves  far  beyond  what  the  facts  warrant.  Some 
of  the  most  deplorable  systems  of  the  past  have  seem- 
ingly been  eradicated,  but  they  have  been  conquered 
in  name  only.  The  underlying  principles  of  the  same 
systems  exist  today,  and  are  at  the  bottom  of  great 
abuses  which  yet  obtain  sanction  of  law  and  public 
approval. 

From  the  dawn  of  history  it  has  been  the  bane  of 
the  world  to  have  a  mercenary  few  studiously  devis- 
ing methods  by  which  the  many  could  be  induced  to 
contribute  to  the  few  the  surplus  of  their  production, 
and  to  keep  the  many  in  ignorance  of  the  means  by 
which  it  is  accomplished. 

In  ancient  Greece  the  oracle  was  the  efficient 
means  whereby  the  few  could  impose  on  the  many 
by  representing  that  the  gods  had  commanded  thus 
and  so.  Rome  followed  with  patrician  control  of  the 
land  and  of  the  functions  of  government.  Central 
Europe  improved  on  this  idea  and  evolved  the  feudal 
system.  Later,  in  the  eleventh  century,  this  system 
was  established  in  England  by  William,  Duke  of  Nor- 
mandy.    Under  it  the  mercenary  few  regulated  the 


8  The  True  Function  of  Money 

social  and  political  relations,  including  the  rights  of 
landed  property  throughout  the  kingdom.  A  feudal 
proprietor  was  one  who  held  his  lands  from  another, 
on  condition  of  certain  services  which  he,  as  a  vassal, 
was  bound  to  perform  for  that  other,  as  his  suzerain 
or  superior.  This  peculiar  relation  was  established 
for  the  purpose  of  obtaining  and  preserving  military 
strength.  With  the  exception  of  the  duty  of  military 
service  to  their  superior,  the  vassals  of  the  king  practi- 
cally were  invested  with  sovereign  power  within  their 
own  dominions,  having  vassals  in  various  degrees  be- 
neath them;  and  living  in  their  fortified  castles,  often 
by  means  of  pillage,  while  the  peasantry  were  bound  as 
serfs,  or  slaves,  to  the  soil. 

The  feudal  barons  being  thus  in  control  of  the 
land,  the  people  were  compelled  to  become  subservient 
to  their  masters.  An  aristocracy  arose,  which  en- 
shrouded itself  in  the  mystic  doctrine  of  the  divine 
right  to  rule ;  the  people  were  held  to  serve,  and  to 
contribute  to  their  masters  the  surplus  of  their  pro- 
duction. 

As  we  scan  the  pages  which  recount  the  growth 
of  this  system,  and  contemplate  the  hopeless  condition 
of  those  serfs,  we  will  unconsciously  hail  ourselves  as 
thrice  blessed  that  we.  of  the  present  day,  have  passed 
beyond  such  injustice.    But,  have  we? 

A  system  founded  upon  such  doctrine  could  not 
survive.  Conditions  became  intolerable.  Step  by  step, 
through  seas  of  tears  and  rivers  of  blood,  the  people 
forced  their  persecutors  to  yield  ground.  The  entire 
system  was  builded  upon  the  ignorance  and  fear  of  the 
many  and  the  cupidity  and  duplicity  of  the  few.     In 


The  Mercenary  Fezv  9 

France  the  condition  of  the  people  became  unbearable. 
Death  was  preferable  to  an  existence  under  such  bur- 
dens. The  storm  broke  and  spent  its  fury  in  the 
French  Revolution.  Every  member  of  the  mercenary 
few,  throughout  the  world,  trembled,  and  the  lesson 
which  they  learned  was  salient. 

Before  the  French  Revolution  had  convulsed  the 
v»'orld,  our  forefathers  were  sowing  the  seeds  of  lib- 
erty in  the  fruitful  soil  of  the  \\'estern  Hemisphere. 
Realizing  the  palpable  injustice  of  conditions  in  Eng- 
land, the  founders  of  this  Republic  resolved  to  deny 
the  hated  institution  of  a  landed  aristocracy  any  foot- 
hold therein.  X'o  aristocratic  titles  and  no  hereditary 
political  rights  were  to  be  allowed.  The  United  States 
of  America  thus  became  the  standard-bearer  of  the 
doctrine  of  equal  rights ;  and  the  mercenary  few  were 
temporarily  restrained.  This  condition  continued  till 
the  outbreak  of  our  Civil  War. 

It  was  while  our  country  was  trembling  in  the 
balance  of  national  existence,  that  the  mercenary  few 
began  to  realize  the  power  existing  in  the  control  of 
the  nation's  money.  With  a  deliberation  sublime  in 
its  assurance,  the  bankers  set  about  the  undoing  of 
their  country  by  attempting  to  foist  an  enormous  debt 
upon  the  men  at  the  front,  and  which  they  succeeded 
in  doing  in  the  late  \\^orld  War.  Fortunately  in  the 
earlier  day  we  had  great  and  strong  men  at  the  head 
of  affairs,  and  the  bankers  were  told  that  their  serv- 
ices were  not  required.  Treasury  notes  and  green- 
backs were  issued,  and.  to  the  surprise  of  all  orthodox 
political  economists,  they  actually  were  money,  and 
they  performed  all  the  functions  of  money. 


10  The  True  Function  of  Money 

This  was  a  condition  which  the  mercenary  few 
could  not  tolerate.  It  behooved  them  to  devise  a  new 
method  by  which  they  could  secure  and  retain  con- 
trol of  the  money.  On  June  3rd,  1864,  the  National 
Bank  Act  was  passed.  By  this  act  the  government  is 
forestalled  in  any  desire  which  it  may  have  to  repeat 
its  former  action  and  ignore  the  will  of  the  bankers. 
Upon  conforming  to  certain  rules  as  to  organization 
and  operation  of  the  banks,  the  bankers,  in  ef- 
fect, came  into  complete  control  of  the  volume  of 
money  permitted  to  circulate.  This  leaves  them  the 
masters  of  our  temporal  welfare. 

This  financial  body,  known  as  bankers  or  finan- 
ciers, has  the  avowed  purpose  of  acquiring,  controll- 
ing, and  loaning  the  nation's  money  for  their  own 
profit.  The  members  are  evidently  pledged  never  to 
invest  one  dollar  legitimately,  but  rather  to  hamper 
commerce  incessantly  by  periodically  hoarding  the 
money,  thus  creating  a  scarcity  of  legal  tender,  which 
in  turn  inflates  the  rate  of  interest  and  demoralizes 
business. 

The  money,  theoretically  the  people's,  but  which, 
under  the  present  system,  is  in  reality  all  the  bankers' 
and,  under  their  domination  and  control,  is  periodically 
refused  at  the  banks,  and  thereby  a  scarcity  is  created 
at  the  most  inopportune  time.  This  causes  the  grim 
visage  of  the  torture  of  an  earthly  hell  to  appear  within 
the  horoscope  of  the  man  of  business,  and  none  but 
the  banker  can  grant  him  salvation.  The  price  of  this  is 
to  pay  the  higher  interest  rate  demanded  and,  besides, 
a  complete  disclosure  of  his  private  business  aflfairs 


The  Mercenary  Few  11 

and  of  those  of  his  friends  with  whom  he  has  or  had 
business  relations. 

This  association  of  bankers,  or  financiers,  is  as 
thoroughly  organized  as  greed  and  selfishness  can  dic- 
tate. Its  headquarters,  we  will  assume,  is  somewhere 
in  the  old  world,  mayhap  London.  The  affairs  of  the 
association  in  the  United  States  are  in  the  hands  of 
able  assistants  whose  headquarters  are  on  Wall  Street, 
New  York.  Every  city  throughout  the  United  States 
has  its  subsidiary  headquarters,  and  every  town  and 
hamlet,  which  supports  a  sufficient  population,  has  its 
official  agent, — its  local  bank.  Each  of  these  official 
agents  is  in  the  hands  of  its  correspondent,  and  these 
correspondents  are,  in  turn,  in  the  hands  of  their  cor- 
respondents, and  so  on  to  final  convergence  at  head- 
quarters in  Wall  Street,  New  York. 

The  association  managers  can  push  an  electric 
button  in  Wall  Street,  and,  instantly,  every  banker 
throughout  the  land,  if  he  be  in  good  standing,  will 
feel  the  thrill  of  the  contact.  With  the  system  thus 
organized,  we  will  follow  the  career  of  the  producer 
of  today.  He  finds  his  existence  one  of  unrequited 
toil  and  of  hopeless  labor  for  his  daily  bread.  He 
resolves  upon  the  only  expedient  by  which  to  extricate 
himself.  Taking  his  small  means,  he  boldly  enters 
business,  that  arena  of  fierce  competition,  to  do  battle 
against  fearful  odds.  He  soon  learns  that  the  scarcity 
of  money,  and  the  profound  stagnation  of  that  which 
is  in  circulation,  has  engendered  a  system  of  credits. 
He  must  conform  to  this  system  in  order  to  compete. 
This  soon  depletes  his  little  treasury,  and,  before  he 
is  aware,  he  has  unwittingly  committed  the  cardinal 


12  The  True  Function  of  Money 

sin  of  becoming  short  of  that  medium  which  the  law 
ordains  legal  tender.  Ruin,  utter  ruin  and  disgrace, 
the  welfare  of  his  family,  the  pitying  glances  of  his 
friends, — all  rise  before  him  like  a  hideous  nightmare. 
He  feels  the  more  advanced  pangs  of  hell's  torment. 
His  friends  would  gladly  help  him  in  his  extremity, 
but  they  are  in  the  same  fix.  seeking,  not  granting 
salvation. 

In  this  crisis,  there  is  but  one  house  of  refuge 
open  to  receive  him, — his  local  bank, — with  his  tem- 
poral savior,  the  manager  thereof,  waiting  to  grant 
salvation ;  that  is,  if  he  so  sees  fit.  Penitently  he  ap- 
proaches, truthfully  he  discloses  his  private  business 
affairs,  and  humbly  he  prays  for  a  remission  of  his 
sins, — the  price  or  penalty  thereof  to  suit  the  banker's 
pleasure.  He  thus  discloses,  to  the  very  one  who  con- 
trols his  destiny,  the  innermost  secret  of  his  ability 
to  maintain  independence,  and  has  incidentally  di- 
vulged the  business  of  all  his  friends  with  whom  he 
has  or  had  dealings.  He  is  now  at  the  full  mercy 
of  the  bank.  There  is  nothing  left  to  do  but  watch 
the  banker's  thumbs.  Thumbs  up  means,  let  him 
live ;  thumbs  down  means,  let  him  die,  commercially 
speaking. 

Thus  the  bank  has  become  our  universal  house 
of  temporal  salvation ;  the  shrine  of  the  almighty  dol- 
lar, our  altar ;  and  the  manager  of  the  bank  our  tem- 
poral savior.  Under  the  present  system  of  permitting 
money  to  become  a  profit-producing  commodity,  there 
is  no  escaping  a  membership  in  the  faith.  Deflection 
from  its  tenets  brings  disaster,  and  a  refusal  of  the 
benefits  of  civilization. 


The  Mercenary  Fezv  13 

These  conditions  throw  him  into  the  ranks  of 
labor,  where  he  is  so  manipulated  by  the  very  force 
which  crushed  him,  that  naught  but  his  daily  bread 
shall  be  his,  the  profits  of  his  labor  being  systematic- 
ally absorbed  by  the  banks,  by  reason  of  the  money 
loaned  to  his  employer,  as  will  be  seen  later. 

The  producer  of  today  seems  as  ignorant  of  his 
rights  as  he  was  in  former  ages.  He  complacently 
accepts  the  doctrine,  that  in  order  to  avoid  poverty 
he  must  practice  it ;  to  escape  being  a  pauper,  he  must 
live  the  life  of  a  pauper;  and  to  enjoy  the  world  he 
must  persistently  reject  all  its  beauties. 


CHAPTER  II 
BANKS  AND  THE  BANKING  SYSTEM 

THE  business  world  holds  the  same  relation  to 
the  banks  and  the  money-lenders  that  the  play- 
ers on  the  outside  of  the  table  do  to  a  faro  bank. 
The  "bank"  has  the  medium  of  exchange  all  hoarded. 
This  medium  is  evidenced  by  little  celluloid  chips  or 
discs.  The  players  borrow  these  chips  by  depositing 
money  as  security.  Thus  equipped,  they  begin  to  strive 
for  profit  by  taking  chances  on  the  fall  of  the  play. 
They  win  and  lose,  apparently  from  the  "bank,"  but 
actually  from  each  other.  The  "bank"  loses  nothing, 
but,  to  the  contrary,  is  the  only  winner,  the  percentage 
on  the  game, — the  interest. 

Gambling  is  so  demoralizing  and  useless  that  legis- 
latures pass  laws  prohibiting  the  practice.  Loaning 
money  by  privately  controlled  banks  is  just  as  unde- 
sirable and  unnecessary :  yet.  under  our  present  sys- 
tem, it  is  a  highly  respectable  occupation. 

Money,  as  decreed  by  the  various  governments,  is 
evidenced  by  small  gold  and  silver  discs  and  paper. 
These  coins  and  bills,  as  they  are  called,  are  very 
easily  lost  or  stolen,  and  when  once  gone  are  hard  to 
identify.  It  is  impracticable  for  each  citizen  to  pro- 
vide a  thief  or  burglar-proof  vault  wholly  for  his  own 
use ;  consequently,  a  few  men  will  construct  a  vault 
sufficiently  large  to  accommodate  a  great  number,  and 


Banks  and  The  Banking  System  15 

others  deposit  their  money  therein.  This  constitutes 
a  bank. 

Naturally,  the  depositors  do  not  feel  that  it  would 
be  fair  for  the  banker  to  take  care  of  their  money  for 
nothing,  and  hence  arises  the  tacit  understanding  that 
the  banker  shall  have  the  privilege  of  loaning  the 
money,  and  whatsoever  it  shall  profit  in  interest  will 
be  his.  This  arrangement  is  eminently  satisfactory 
to  the  banker. 

With  this  control  the  banker  is  in  a  position  to 
inaugurate  a  system  so  like  unto  the  faro  game  just 
described.  He  has  control  of  the  chips, — the  people's 
money.  He  passes  them  out  to  the  people  again  with 
the  compact  that  they  will  be  returned  at  a  stated 
time,  plus  the  interest.  The  people  receive  the  chips 
(loaned  money)  and  enter  with  zest  into  the  grand 
game  of  profit  and  loss.  What  one  wins  the  others 
lose ; — but  not  the  bank.  The  more  some  win,  the 
more  others  will  lose ;  but  not  the  bank.  Every  win- 
ning by  some  makes  a  losing  by  others  a  certainty, 
and  of  which  of  them  the  banker  wots  not.  Scarcity 
of  money  aggravates  the  trouble ;  higher  and  higher 
mounts  the  rate  of  interest ;  and  more  and  more  is 
the  money  hoarded.  Sooner  or  later  the  people's 
money  on  deposit  has  accomplished  a  most  astonishing 
feat :  it  has  won  itself  away  from  the  people  and 
passed  into  the  hands  of  the  banker. 

For  all  this  the  people  have  received  naught  in 
return,  unless,  perchance,  a  pleasant  smile  and  the 
pleasure  of  being  addressed  by  their  correct  names. 
Wall  Street  is  the  place  where  this  system  is  operated 


16  The   True  Function  of  Money 

on  a  wholesale  plan,  and  each  bank  throughout  the 
country  is  an  active  assistant. 

Imagine  a  business,  the  full  productive  capital  of 
which  is  furnished  by  the  people,  but  which  is  oper- 
ated in  behalf  of  private  individuals,  and  directly 
against  the  interests  of  those  who  furnish  the  capital. 
In  time  the  bankers  have  won  from  the  people  all  that 
the  people  had,  and  this  without  the  slightest  risk  and 
without  one  tap  of  productive  labor. 

The  banking  system  divides  the  world  into  two 
rclasses — the  depositors,  the  constant  borrowers  of 
'  their  own  money ;  and  the  bankers,  the  constant  lend- 
ers of  something  they  do  not  own,  and  at  the  price  of 
an  enormous  tribute.  This  gain  is  greater  by  far  than 
the  gain  of  the  most  favored  commodity,  and  is  great 
enough  to  absorb  in  the  aggregate  the  profits  of  the  de- 
positors. 

Let  us  examine  the  possibilities  of  these  gains : 
The  Federal  Reserve  Act  provides  as  follows : 

"Sec.  19.  Demand  liabilities  within  the  mean- 
ing of  this  Act  shall  comprise  all  deposits  payable 
within  thirty  days,  and  time  deposits  shall  comprise 
all  deposits  payable  after  thirty  days,  and  all  savings 
accounts  and  certificates  of  deposit  which  are  subject 
to  not  less  than  thirty  days'  notice  before  pay- 
ment. *  *  * 

"(b)  A  bank  in  a  reserve  city,  as  now  or  here- 
after defined,  shall  hold  and  maintain  reserves  equal 
to  fifteen  per  centum  of  the  aggregate  amount  of  its 
demand  deposits  and  five  per  centum  of  its  time  de- 
posits." 


Banks  and  The  Banking  System  17 

The  reserve  of  a  bank  is  that  portion  of  its  de- 
posits which  is  kept  in  hand  to  meet  average  liabili- 
ties, and  which  is  therefore  not  employed  in  discounts/ 
and  loans. 

These  provisions  of  that  act  make  the  following 
a  possibility : — I  can  open  a  bank  and  the  people  will 
deposit  with  me  one  hundred  thousand  dollars  pay- 
able on  demand.  As  I  have  to  keep  only  fifteen  per 
cent  of  my  aggregate  demand  deposits,  I  can  make 
an  initial  loan  of  eighty-five  thousand  dollars.  This 
money,  in  practice,  is  not  withdrawn  from  the  bank, 
but  is  left  as  a  checking  account.  However,  if  the 
money  is  really  taken  out  of  the  bank  and  paid  to  an- 
other person,  that  person  immediately  re-deposits  in 
the  bank.  It  makes  no  difference  which  bank  he  de- 
posits in.  as  all  the  banks  enjoy  all  the  deposits,  and 
this  will  give  me  my  share. 

That  we  may  more  clearly  perceive  the  condition, 
we  will  say  that  this  same  eighty-five  thousand  dollars 
are  re-deposited  in  my  bank.  This  gives  an  added 
deposit,  in  the  aggregate,  and  I  can  now  loan  85% 
of  this  amount,  or  seventy-two  thousand  two  hundred 
and  fifty  dollars. 

This  sum  is  re-deposited  with  me,  and  I  can  again 
loan  85%  of  this  amount,  or  sixty-one  thousand  four 
hundred  and  twelve  dollars  and  fifty  cents. 

We  now  understand  the  possibilities.  Carry  this 
computation  through,  and  we  see  that  a  bank  with  one 
hundred  thousand  dollars  demand  deposits  can  be 
strictly  within  the  law  and  yet  create  an  interest-bear- 
ing debt  of  five  hundred  and  sixty-six  thousand  six 
hundred  and  sixty-six  dollars  and  sixty-six  and  two- 


18  The  True  Function  of  Money 

thirds  cents,  and  in  the  end  will  have  the  original  one 
hundred  thousand  dollars  as  reserve  in  the  bank. 

Figure  the  above  sum  on  ninety-day  loans  at  8% 
per  annum,  and  we  find  the  interest  for  one  year  to 
be  forty-six  thousand  seven  hundred  and  eleven  dol- 
lars and  fifty-five  cents,  or  a  little  over  46.7%  on  the 
original  one  hundred  thousand  dollars, — which  is  all 
the  cash  used  in  the  transaction.  Figure  the  same 
sum  at  12%,  the  usury  limit  in  some  states,  and  we 
find  the  interest,  for  one  year,  to  be  seventy-one  thou- 
sand one  hundred  and  twenty-one  dollars  and  sixty- 
six  cents,  or  more  than  71%  on  the  original  one  hun- 
dred thousand  dollars. 

The  same  law  permits  the  time-deposits  to  be  so 
manipulated  that  they  will  create  an  interest-bearing 
debt  of  one  million  nine  hundred  thousand  dollars, 
which  sum,  computed  at  8%  per  annum  on  ninety-day 
loans,  will  yield  one  hundred  and  fifty-six  thousand 
six  hundred  and  twenty-one  dollars  and  ten  cents,  or 
more  than  156%  per  annum  on  the  original  one  hun- 
dred thousand,  and  at  12%  will  yield  two  hundred  and 
thirty-eight  thousand  four  hundred  and  sixty-six  dol- 
lars and  seventy-four  cents,  or  more  than  238%  per 
annum  on  the  only  cash  in  the  transaction, — the  orig- 
inal one  hundred  thousand  dollars.  Our  banking  sys- 
tem is  thus  in  a  position  to  receive  the  people's  money 
on  deposit  and  use  it  to  saddle  the  above  enormous 
debt  upon  the  same  people,  and  levy  the  crushing  trib- 
ute which  the  foregoing  figures  disclose. 

This  practice  of  exacting  interest  on  money  by  a 
privately-controlled  banking  system  has  brought  the 
monev, — the  blood  of  commerce. — into  the  hands  of 


Banks  and  The  Banking  System  19 

a  very  few ;  and  thereby  constitutes  them  the  autocrats 
of  our  temporal  destiny.  They  are  thus  empowered  at 
will  to  contract  or  expand  the  volume  of  money  in  cir- 
culation. The  contraction  is  accomplished  by  period- 
ically refusing  loans  and  calling  in  all  outstanding  ob- 
ligations, which  in  turn  stagnates  and  demoralizes 
business. 

The  principle  of  the  right  of  money  to  earn  in- 
terest is  based  upon  the  false  conception  that  money 
is  a  commo'dity.  The  so-called  orthodox  political 
economist  is  quite  satisfied  with  this  conception.  That 
we  may  perceive  the  fallacy  of  this  reasoning,  let  us 
assume  this  idea  to  be  sound.  Under  these  conditions 
two  men  labor  at  the  same  work  for  the  same' length 
of  time.  One  takes  his  pay  in  money,  say  one  hun- 
dred dollars,  and  the  other  in  a  horse  valued  at  an 
equal  amount.  They  each  start  a  savings-bank,  one  to 
use  his  money  an"d  the  other  to  use  his  horse,  for  loan- 
ing purposes.  As  before  seen,  the  man  with  the  money 
can  create  an  interest-bearing  debt  of  nineteen  times 
the  amount  of  his  money,  and  in  the  end  will  have  all 
his  money  back  in  the  bank  as  a  reserve.  Apply  the 
privilege  of  the  banking  law  to  the  man  with  the  horse, 
and  he  could  have  nineteen  horses  earning  for  him, 
and  in  the  end  will  have  his  horse  back  in  the  bank. 
It  is  evident  that  there  are  not  nineteen  horses  earn- 
ing; still,  the  owner  of  the  horse  can  collect  these  vis- 
ionary earnings.  This  is  exactly  what  is  done  by  the 
banker. 

It  is  strange  that  the  same  intellect  will  pronounce 
this  transaction  the  height  of  absurdity  when  applied 


20  The   True  Funetion  of  Money 

to  the  commodity. — horse. — and  a  paragon  of  common 
sense  when  applied  to  the  alleged  commodity,  money. 

Most  people  entertain  a  deep-seated  conviction 
that,  if  a  bank  loans  five  thousand  dollars,  and  the 
borrower  purchases  an  autotruck  with  the  money,  the 
bank  had  furnished  the  borrower  with  the  autotruck, 
and.  in  sound  logic  and  justice,  has  an  interest  therein 
which  entitles  it  to  share  in  the  profits  earned  by  the 
truck,  and  also  to  have  those  profits  guaranteed.  Let 
us  analyze  this  transaction  and  comprehend  exactly 
what  was  done.  It  is  evident  that  the  borrower  could 
not  have  negotiated  the  loan  unless  his  credit  was  am- 
ple to  cover  all  demands.  This  credit,  then,  was  the 
capital  with  which  he  sought  to  acquire  the  autotruck. 
His  credit  is  based  upon  one  hundred  thousand  bush- 
els of  wheat  of  a  market  value  of  one  hundred  thou- 
sand dollars.  He  would  gladly  exchange  five  thou- 
sand bushels  of  wheat  for  the  autotruck,  but  the  seller 
cannot  use  wheat. — he  must  have  some  other  com- 
modity, or  perhaps  several  commodities. 

This  gives  rise  to  that  complex  exchange  which 
requires  a  medium  for  the  economical  consummation 
thereof.  The  borrower  must  apply  to  the  banker  for 
a  loan,  that  is.  the  privilege  of  using  his  own  credit. 
The  banker  says :  "Permit  me  to  levy  a  tax  upon  your 
credit,  that  thing  yott  have  produced,  and  /  will  per- 
mit you  to  use  it :  and  as  a  security  that  you  will  pay 
me  this  tax.  together  with  my  means  of  levying  the 
same. — the  principal. — you  must  pledge  to  me  all  your 
substance." 


Banks  and  The  Banking  System  21 

This    is   the   unfounded    and   unauthorized   basis 
upon  which  the  profit-producing  power  of  money  is 

placed.    An  understanding  of  the  true  status  of  money 
will  point  the  way  to  a  correction  of  this  evil. 


CHAPTER  III 
THE  ORIGIN  OF  MONEY 

WHEN  living  in  a  primitive  condition,  hu- 
man beings  have  no  need  for  money.  All 
commerce  may  be  carried  on  in  the  prim- 
itive manner  in  which  they  live.  It  is  natural 
and  convenient  to  barter  among  themselves  with 
the  actual  commodities  at  hand.  Thus,  one  will 
have  a  fish  and  another  a  rabbit.  It  transpires 
that  they  are  each  fond  of  fish  and  rabbit  and  desire 
to  have  a  little  of  each,  rather  than  all  of  one  or  of 
the  other.  As  a  result,  they  agree  to  exchange  one- 
half  a  fish  for  one-half  a  rabbit,  and  vice  versa.  Hav- 
ing done  this,  a  transaction  has  been  consummated  in 
the  world  of  commerce  as  full  and  complete  as  any 
which  has  ever  heretofore  been  or  will  ever  hereafter 
be  efifected.  The  purchase  of  a  battleship  by  one  na- 
tion from  another  is  no  more  a  complete  transaction 
than  this. 

This  primitive  method  of  carrying  on  commerce 
can  remain  in  its  simplest  form  only  so  long  as  each 
member  of  society  is  an  actual  producer  and  simple 
and  modest  in  his  desires.  Complex  conditions,  con- 
certed action  along  special  lines  of  endeavor,  larger 
and  more  elaborate  transactions  in  the  world  of  com- 
merce and  multitudinous  desires  engendered  by  ad- 
vancing civilization,  all  tend  to  make  it  impossible  to 
carry  on  trade  in  this  simple  form.     It  then  becomes 


The  Origin  of  Money  23 

necessary  to  exchange  credits  for  commodities, — 
hence  all  nations  have  been  called  upon  to  invent  and 
adopt  means  to  accomplish  this  end. 

Evidently  one  very  simple,  natural  and  complete 
method  presented  itself,  for  all  nations  perceived  it 
and  all  nations  have  adopted  it — Money.  By  the  use 
of  this  medium  credits  may  be  exchanged  and  com- 
plex transactions  simplified  both  as  to  time  and  quan- 
tity. Money,  then,  is  chosen  as  a  me^dium  to  assist  in 
these  transactions  as  the  natural,  logical  and  complete 
solution  of  the  problem.  This  is  the  normal,  the  one 
and  only  use  of  money.  No  other  condition  called  it 
into  being,  and  no  conditions  whatsoever  have  en- 
larged or  detracted  from  its  usefulness,  nor  in  any 
way  changed  it  from  the  simple  meaning  of  its  defini- 
tion, "A  medium  of  exchange." 

By  some  strange  means,  however,  money  has  be- 
come diverted  from  this  natural  and  only  use.  By  a 
crude  course  of  reasoning  it  has  been  permitted  to 
become  the  gyves  and  fetters  of  the  struggling  masses. 

The  human  family  evolved  from  some  unknown 
source.  According  to  Aloses,  we  are  descended  from 
a  perfect  pair  in  the  Garden  of  Eden.  According  to 
Darwin,  our  ancestors  were  not  so  perfect.  It  mat- 
ters not  as  to  our  origin.  We  have  sufficient  exact 
knowledge  of  the  matter  to  know  that  we  have  been 
here  a  long  time  and  that  history  nowhere  relates  a 
change  in  the  dominating  demands  of  existence.  Fore- 
most among  these  demands  is  that  of  production.  Food, 
raiment  and  shelter  must  be  produced  in  order  that  we 
may  live.  Having  thus  provided  subsistence,  another 
demand  of  equal  importance  arises.     We  must  protect 


24  The  True  Function  of  Money 

these  means  of  existence  from  the  encroachments  of 
enemies.  These  demands  were  urgent,  and  society- 
was  called  upon  to  devise  ways  and  means.  As  a  so- 
lution it  became  evident  that  two  armies  must  be  or- 
ganized,— an  Army  of  Industry  and  an  Army  of  De- 
fense. These  armies,  unequipped,  were  inefficient. 
The  army  of  defense  was  powerless  to  accomplish  that 
for  which  it  was  organized,  unless  armed  with  weap- 
ons of  defense.  The  army  of  industry  was  powerless 
to  accomplish  that  for  which  it  was  organized,  unless 
armed  with  a  medium  of  exchange, — a  method  by 
which  credits  could  be  expeditiously  and  economically 
exchanged  for  commodities. 

These  requirements  were  evident  from  the  be- 
ginning. In  the  evolution  from  the  family  to  the  tribe, 
from  the  tribe  to  the  State,  and  from  the  State  to  the 
Nation,  we  find,  concomitant  therewith,  the  families 
with  their  pieces  of  silver  and  slingshots,  the  tribes 
with  their  wampum  and  war  clubs,  the  States  with 
their  currency  and  musketry,  and  the  Nations  with 
their  gold  standard  and  machine  guns.  The  idea  and 
necessity  for  proper  equipment  of  the  two  armies  is 
one  and  inseparable. 

The  army  of  defense  is  recruited  from  the  body 
of  the  people  and  officered  by  men  best  suited  for 
thait  purpose.  The  nation  as  a  whole,  acting  through 
its  representative  government,  determines  what  the 
equipment  shall  consist  of,  and  acquires  and  issues 
the  same  to  the  army  for  use  only.  To  each  soldier 
is  provided  all  the  equipment  he  can  use,  to  the  extent 
of  his  ability (  his  credit.)  The  soldier  can  never  ac- 
quire title  to  this  equipment.     He  cannot  refuse   to 


The  Origin  of  Money  25 

use  it  himself,  nor  can  he  loan  it  to  other  soldiers  for 
a  consideration, — a  proceeding  which  would  soon  bring 
all  the  equipment  into  his  hands. 

No  soldier,  nor  association  of  soldiers,  can  estab- 
lish an  arsenal  where  other  soldiers  may  deposit  their 
public  equipment,  to  be  in  turn  loaned  to  needy  war- 
riors, and  always  for  a  handsome  consideration,  pay- 
able to  private  individuals ;  or  refuse  the  use  of  this 
public  property  to  the  army,  though  it  may  be  in  sore 
distress.  No  soldier  can  refuse  to  use  his  equipment 
and  lock  it  up  in  a  safe-deposit  box,  thereby  defeating 
other  needy  soldiers  in  the  privilege  of  its  use.  To 
the  contrary,  every  soldier  uses  the  equipment  as  long 
as  he  is  able  to,  or  as  long  as  he  needs  it ;  and  when 
the  need  therefor  ceases,  or  the  soldier  becomes  in- 
capacitated, his  equipment  is  forthwith  deposited  in  a 
public  arsenal,  to  be  re-issued  to  another  who  is  at 
that  time  withstanding  the  brunt  of  battle. 

This  system  of  strict  accountability  to  the  people 
through  their  organized  government  makes  for  the 
highest  efficiency  in  the  army  of  defense.  Soldiers 
and  equipment  are  ever  ready  and  answerable.  In 
periods  of  great  strife  and  dire  necessity  there  is  no 
haggling  with  a  coterie  of  private  individuals  for  the 
use  of  equipment,  with  a  possible  refusal  in  toto;  and 
if  granted,  it  is  done  at  a  price  that  is  staggering. 

The  army  of  industry  is  recruited  from  the  body 
of  the  people  and  officered  by  men  best  suited  for 
that  purpose  (the  employers).  The  nation  as  a  whole, 
acting  through  its  representative  government,  deter- 
mines what  the  proper  equipment  for  this  army  shall 
consist  of.  anil  acquires  and  issues  the  same.     It  is 


26  The  True  Function  of  Money 

needless  to  say  that  the  equipment  in  this  case  is 
money, — a  medium  of  exchange. 

Thus  far  these  equipments  seem  identical.  They 
are  for  the  same  purpose,  are  determined  and  issued 
by  the  same  authority,  and  in  ample  quantities  to  in- 
sure efficiency.  At  this  point,  however,  a  radical  di- 
vergence occurs.  In  the  place  of  this  last  equipment 
being  issued  to  the  army  of  industry  for  use  only,  it 
is  the  accepted  opinion  that  it  is  issued  as  a  commod- 
ity, to  be  bartered  and  traded  like  any  other  commod- 
ity. The  purpose  for  which  it  was  devised  is  ignored, 
and  the  question  of  the  efficiency  of  the  army  is  rele- 
gated to  a  seat  far  in  the  rear.  The  proper  idea,  in 
the  accepted  opinion  of  mankind,  is  promptly  to  be- 
gin to  barter,  trade,  and  haggle  with  this  equipment. 
The  first  who  will  refuse  to  be  a  soldier  and  refuse 
to  use  his  equipment  (Money),  but  loans  it  to  some 
needy  warrior  for  a  price,  and  persistently  follows  this 
course,  soon  blossoms  forth  as  an  eminent  financier. 
He  who  thus  refuses  to  take  his  place  in  the  ranks 
obliges  others  to  fight  his  battles  for  him  and  levies 
a  crushing  tax  on  them  for  the  privilege. 

The  first  individual  or  coterie  of  individuals 
thus  refusing  to  become  soldiers  and  refusing  to  use 
their  equipment,  but  instead  will  construct  a  deposi- 
tory for  such  equipment  (a  bank)  wherein  all  other 
individuals  who  refuse  to  use  their  equipment  may 
come  and  store  the  same,  will  be  most  advantageously 
circumstanced. 

They  who  thus  refuse  to  answer  the  draft  are 
now  in  a  position  to  take  that  which  they  do  not  even 
have  the  use  of,  and  so  manipulate    the  same  that  the 


The  Origin  of  Money  27 

boys  in  the  trenches  do  not  know  from  one  day  to  the 
next  how  much  equipment  will  be  at  their  disposal. 
The  manipulators,  far  in  the  rear,  are  sole  arbiters 
of  this  matter,  self-constituted  and  answerable  to  no 
appeal.  At  best,  if  those  in  the  forefront  of  strife 
are  to  have  the  use  of  any  of  this  equipment,  it  is  at 
the  price  of  a  crushing  tribute.  Whenever  it  is  to  the 
best  interest  of  these  manipulators,  the  demand  for 
equipment  in  the  trenches  is  ignored ;  as  a  result  the 
army  is  paralyzed,  the  common  foe  of  starvation  and 
misery  stages  a  drive,  the  army  is  routed  and.  being 
closely  pursued,  the  retreat  becomes  a  panic.  They 
are  now  perfectly  good  soldiers  out  of  a  job.  They 
have  become  a  motley,  disorganized  mob,  generically 
known  as  the  ranks  of  the  unemployed.  They  meet 
on  a  neighboring  sand  lot  and  vehemently  denounce 
their  officers  and  the  entire  staflf  for  this  debacle.  The 
officers  and  staff  in  turn  hotly  respond  anxl  blame  the 
rank  and  file. , 

The  real  cause  of  the  trouble  should  be  laid  at 
the  door  of  those  manipulators  who,  for  private  gain, 
refused  the  use  of  public  equipment. 


CHAPTER  IV 

DEFINITIONS  OF  MONEY 

THE  definitions  of  money  adopted  by  modern 
political  economists  are : 

1st.     Money  is  a  medium  of  exchange. 

2nd.    Money  is  the  measure  of  value. 

3rd.     Money  is  the  circulating  medium. 

The  third  definition  is  quite  meaningless.  It  con- 
veys no  definite  idea. 

Money  is  the  established  measure  of  value  (pri- 
marily of  the  value  of  credit)  and  takes  its  place 
among  the  measures  of  other  quantities,  such  as  length 
and  weight. 

Every  article  of  wealth  (commodities)  contains 
one  or  more  of  three  elements — weight,  dimension 
and  value — which  must  be  standarized.  (Credit  has 
but  one  element,  value).  To  accomplish  this,  a  unit 
for  each  element  is  established  by  law.  These  units 
are  simple  and  familiar  to  all :  the  yard,  the  pound 
and  the  dollar.  There  is  nothing  intricate  and  mysti- 
fying about  any  of  them.  Honestly  to  perform  their 
functions,  it  is  vital  that  the  yard  be  maintained  a 
yard  in  length,  the  pound  a  pound  in  weight,  and 
that  the  dollar  be  a  dollar-worth.  The  yard  measure 
and  the  pound  weight  are  fixed  and  stable  and  will 
fully  perform  their  functions  at  any  time.  The  dollar 
is  not  stable — that  is,  not  always  of  the  value  of  a 


The  Origin  of  Money  29 

dollar-worth — a  condition  which  materially  impairs  its 
usefulness.  The  accepted  idea  that  money  is  a  com- 
modity, subject  to  private  ownership  and  control,  pre- 
vents it  from  thus  properly  functioning.  This  condi- 
tion arises  by  virtue  of  the  fact  that  the  dollar,  in  addi- 
tion to  its  function  as  the  measure  of  value,  must  also 
serve  as  the  medium  of  exchange  of  credits.  This 
added  function  is  as  simple  and  natural  as  the  former, 
provided  that  the  dollar  is  permitted  to  assume  its  true 
status.  Under  our  present  system  this  is  not  possi- 
ble. 

None  of  these  definitions,  either  directly  or  by 
implication,  describes  money  as  either  gold  or  silver, — 
a  commodity,- — an  article  of  commerce  to  be  bought 
and  sold  on  the  market  as  a  profit-producer.  None 
of  the  political  economists,  whose  works  it  has  been 
my  pleasure  to  peruse,  have  in  any  way  intimated  that 
such  a  definition  would  be  correct.  Most  of  them  are 
content  with  the  simple  phraseology  of  "money  is  the 
medium  of  exchange."  Webster  defines  it  as  "a  me- 
dium of  commerce."  He  also  defines  a  commodity  as 
"including  every  thing  movable  that  is  bought  and 
sold — goods,  wares,  merchandise,  produce  of  the  land 
and  manufacturing,"  etc. 

Money  is  the  medium  chosen  to  facilitate  the  in- 
terchanging of  commodities  by  the  use  of  credit.  If 
that  medium  should  become  one  of  the  commodities, 
it  must,  as  a  matter  of  necessity,  lose  its  identity  as  a 
medium  of  exchange.  The  assumption  of  such  dia- 
metrically opposed  characteristics  is  untenable ;  and 
when  we  further  consider  that  money  is  by  law  made 
legal  tender,  that  is,  "currency  that  the  law  permits 


30  The  True  Function   of  Money 

one  to  offer,  and  requires  another  to  accept,  in  pay- 
ment of  a  debt,"  it  is  impossible  to  contemplate  it  as  a 
commodity. 

Commodities  are  the  basic  foundation  of  all  pro- 
duction and  commerce.  Nothing  else  is  wealth.  Any 
product  of  labor,  physical  or  mental,  which  gratifies 
a  desire  of  mankind  is  a  commodity,  and  is  subject 
to  private  ownership  and  control ;  and,  if  it  be  a 
tangible  thing,  it  is  proof  of  its  own  existence  and 
quantity. 

Credit  is  the  right  to  exercise  private  ownership 
and  control  of  a  commodity.  It  is  no  part  of  wealth. 
Credit  may  be  specific  or  universal, — specific,  when 
attached  to  a  particular  commodity,  and  universal 
when  it  may  be  applied  to  any  commodity  and  at  any 
time.  The  commodity  and  the  credit  in  the  commodity 
are  separate  and  distinct  negotiable  entities,  and  they 
may  both  be  in  the  same  owner  or  each  in  a  different 
owner,  and  in  that  case  the  commodity  is  proof  of  the 
existence  and  the  measure  of  quantity  of  the  credit. 

In  commercial  transactions  one  may  sell  his  credit 
and  reserve  the  commodity ;  or,  he  may  sell  the  com- 
modity and  reserve  the  credit ;  or  he  may  sell  both 
the  commodity  and  the  credit.  If  he  desires  to  sell 
his  specific  credit  and  reserve  the  commodity,  he  exe- 
cutes a  note  and  mortgage  on  the  commodity,  and  the 
transaction  is  termed  a  loan.  If  he  desires  to  sell  the 
commodity  and  reserve  the  specific  credit,  he  trans- 
fers the  commodity  to  the  purchaser  and  accepts  a 
note  and  mortgage  on  it  for  the  purchase  price,  and 
the  transaction  is  termed  a  sale  with  note  and  mort- 


The  Origin  of  Money  31 

gage  back.  If  he  desires  to  sell  both  the  commodity 
and  the  credit,  the  sale  is  made  without  reservation 
and  he  accepts  as  the  equivalent  a  universal  credit  in 
all  commodities :  this  transaction  is  termed  "for  cash." 

Commodities  and  credits  are  the  only  entities  ne- 
gotiated in  any  of  the  foregoing  transactions,  and  they 
each  have  their  value  inherent.  This  value  exists 
without  the  aid  of  or  the  slightest  reference  to  money. 
If  it  were  possible  to  assure  the  world,  by  individual 
testimony,  of  the  existence  and  amount  of  credit  de- 
sired to  be  exchanged  at  any  time,  money  would  be 
an  unknown  quantity.  Credits  could  be  passed  in 
parole,  and  commerce  could  thus  be  carried  on  without 
difficulty. 

A  credit  can  be  created  only  by  first  creating 
an  article  of  wealth, — a  commodity.  The  creation  of 
money  does  not  create  credit,  for  a  commodity  which 
must  precede  a  credit  cannot  be  created  by  law.  In 
order  to  acquire  money  an  individual  must  first  have  a 
properly  created  credit.  Having  this  credit  already, 
money  adds  nothing  to  its  value.  Accumulation  of 
money  by  interest  on  money  does  not  accumulate  an 
honest  credit,  for  credit  thus  accumulated  has  had  no 
article  of  wealth  previously  created  for  a  mother;  and 
as  it  must  have  had  such  a  mother,  it  must  have  been 
taken  away  from  the  creator  of  that  mother,  and  for 
no  value  received. 

As  long  as  a  credit  can  be  traced  to  the  com- 
modity which  gave  it  birth,  that  commodity  is  proof 
of  the  existence  of  the  credit  and  its  quantity;  but 
when  it  becomes  universal  it  lacks  this  proof.     This 


Ii2  The  True  Function  of  Money 

defect  was  easily  remedied.  The  people,  by  agree- 
ment which  has  passed  through  the  proper  channels  of 
civilized  governments  and  has  been  crystallized  into 
law,  are  to  guarantee  all  representations  of  any  owner 
of  credit  as  to  its  existence  and  quantity  while  in  this 
intangible  and  universal  form.  The  governments  ac- 
complish this  by  issuing  authentic  and  guaranteed 
proofs  of  these  facts.  This  proof  has  a  standardized 
unit,  and  is  issued  in  such  unit,  and  fractions  and  mul- 
tiples thereof,  that  any  desired  quantity  of  credit  may 
be  accurately  measured. 

The  means  or  substance  employed  to  convey  this 
governmental  guaranty  could  be  anything,  subject 
only  to  the  requirements  of  convenience  and  stability. 
Gold  and  silver  have  been  chosen,  not  with  the  slightest 
reference  to  their  value,  but  solely  to  such  convenience 
and  stability.  Paper  is  far  more  convenient,  but.  un- 
less limited  to  a  fixed  standard,  it  lacks  stability. 

I  call  your  attention  to  the  fact  that  our  copper 
coins  are  not  redeemable  in  gold.  Their  worth  as 
money  depends  entirely  upon  themselves.  Cast  copper 
is  worth,  on  an  average,  fifteen  cents  the  pound; 
coined  copper  is  worth  one  hundred  and  forty-five 
cents  the  pound.  Neither  value  is  related  to  nor  does 
it  in  any  way  affect  the  other. 

That  we  do  not  confuse  money. — that  entity 
which  is  created  by  law. — with  the  substance,  gold 
or  silver,  is  paramount.  Gold  or  silver  bullion  is  a 
commodity ;  when  coined  it  is  devoted  to  the  purpose 
of  conveying  that  intangible  function  of  the  law — 
money — and  it  then  ceases  to  be  a  commodity.     Gold 


The  Origin  of  Money  Z2> 

and  silver  bullion  is  not  money  any  more  than  is  lead 
or  zinc.  Even  though  a  nugget  of  gold  of  the  exact 
weight  and  fineness  of  a  ten-dollar  gold  piece  were 
coined  exactly  as  money  by  an  individual,  it  would 
not  be  money.  It  would  be  a  counterfeit.  Gold  and 
silver  must  have  some  added  attribute  before  they  can 
function  as  money,  and  this  attribute  could  be  im- 
parted to  lead  or  zinc  as  properly  as  to  gold  or  silver. 
This  attribute  has  no  connection  with  nor  dependency 
upon  the  substance  which  may  be  chosen  as  its  ve- 
hicle. It  is  an  entity  within  itself. — a  law.  whose  only 
purpose  is  to  function  as  a  medium  of  exchange  and 
legal  tender.  The  failure  to  distinguish  between  the 
two  entities,  money  and  gold,  leads  to  a  confounding 
of  the  two,  with  the  resultant  generally  accepted  belief 
that  they  are  one  and  the  same  thing  and  that  that 
thing  is  gold. 

This  vital  distinction  having  escaped  them,  they 
who  are  profoundly  versed  in  the  laws  of  economics 
have  no  difficulty  in  rapidly  reasoning  as  follows : — 
Money  is  gold ;  gold  is  a  commodity :  a  commodity  is 
wealth ;  wealth  can  become  capital ;  capital  has  earn- 
ing power  and  is  subject  to  private  ownership  and 
control.  Hence,  a  fortiori,  money — a  law — has  earn- 
ing power  and  is  subject  to  private  ownership  and 
control.  This  again  emphasizes  the  importance  of 
having  a  correct  starting-point  if  you  wish  to  find  a 
correct  stopping-point  in  any  excursion,  be  it  in  travel 
or  speculation. 

As  gold  and  silver  bullion  has  no  value  nor  earn- 
ing power  as  mouev.  but  requires  an  added  attribute 


34  The  True  Function  of  Money 

before  it  can  function  as  money,  and  as  that  added 
attribute  is  created  by  law,  then  that  added  attribute 
has  no  value  nor  earning  power,  for  value  and  earning 
power  cannot  be  created  by  legislation.  The  votaries 
of  our  present  monetary  system  strenuously  affirm 
this  economic  fact  when  mention  is  made  of  issuing 
inconvertible  paper  money. 

Take  the  two  pieces  of  gold  mentioned  above ; — 
of  the  same  weight  and  fineness  and  coined  in  exact 
duplicate,  one  by  an  individual  and  the  other  by  the 
government.  One  will  be  money  and  the  other  a  coun- 
terfeit. One  is  the  medium  of  exchange  and  legal  ten- 
der, the  other  is  not.  A  vast  difference  exists.  Lay 
them  upon  the  table  before  you ;  carefully  scrutinize 
them  and  see  if  you  can  discover  what  causes  this 
difference.  You  will  fail.  The  only  answer  you  can 
give  yourself  is,  that  you  have  faith  in  one  and  doubts 
about  the  other.  You  have  faith  in  the  one  because 
you  have  faith  in  your  government  and  the  laws  pro- 
mulgated by  it.  This  faith  which  you  have  in  the  laws 
of  the  land  is  what  constitutes  money,  and  faith  is  not 
a  commodity.  No  individual  can  have  a  right  to  con- 
trol the  volume  of  that  faith  to  be  exercised  by  others, 
nor  has  he  a  right  to  tax  others  for  the  privilege  of 
exercising  their  faith  in  their  government  just  as 
freely  as  is  his  own  right. 

Gold  and  silver  are  the  physical  substances  chosen 
by  which  to  convey  the  government's  proof  and  guar- 
anty, just  as  I  use  the  paper  upon  which  I  now  write 
to  convey  my  thoughts.  The  medium  itself  may  be  of 
little  or  no  value ;  it  is  the  proof  and  guaranty  stamped 


The  Origin  of  Money  35 

on  the  medium  which  function  and  are  of  value. 
Money  in  its  last  analysis  is  but  a  function  of  govern- 
ment, and  it  is  this  function  which  the  bankers  and 
money-lenders  arrogate  unto  themselves  as  a  com- 
modity, and  for  the  privilege  of  its  use  levy  a  private 
tax  upon  industry  and  commerce. 

If  a  loan  were  made  to  one  without  credit,  he 
would  be  getting  something  which  he  did  not  pre- 
viously have ;  but  money-lenders  do  not  do  business 
that  way.  No  one  can  borrow  money  unless  he  first 
have  a  specific  credit.  As  he  already  had  the  credit, 
he  does  not  desire  to  borrow  any  more  credit.  His 
pressing  need  is  to  be  able  to  convert  his  specific  credit 
into  a  universal  form.  This  he  cannot  do  except  in 
the  manner  provided  by  law.  This  way,  this  law,  is 
in  the  control  of  the  money-lenders,  and  the  capital- 
izing of  this  law  of  the  land  is  what  is  known  as  the 
banking  business. 

Conceding  money  to  be  a  commodity  is  the  error 
upon  which  all  subsequent  reasoning  is  based.  This 
opens  the  portals,  and  the  logic  of  economics  carries 
us  irresistibly  to  an  erroneous  conclusion.  Having 
accepted  money  as  a  commodity,  it  automatically  fol- 
lows that  it  is  wealth,  and  this  in  turn  gives  it  the 
properties  of  capital,  thus  assuring  it  the  right  to  earn. 
Having  established  its  status  as  a  commodity,  all  the 
prevailing  rules  of  political  economy  are  easily  and 
conclusively  applied.  The  most  convincing  logic,  when 
applied  to  an  erroneous  assumption  of  facts,  gets  us 
nowhere.  No  assertion  is  as  valuable  as  one  small 
fact.  Neither  a  law  nor  the  functions  of  a  law  can 
become  a  commodity. 


36  The   True  Function  of  Money 

The  basic  foundation  of  civilized  governments  is 
security  to  each  individual  in  the  undisturbed  posses- 
sion of  all  the  things  which  are  rightfully  his.  These 
things  are  the  articles  of  which  the  world's  wealth  is 
composed ;  hence  the  true  interest  of  each  individual 
lies  in  an  assurance  that  he  will  be  protected  in  the 
ownership  of  these  things,  and  in  his  credit  or  right 
to  them.  This  assurance  is  evidenced  by  money; 
money  is  thus  the  guaranty  of  the  government.  That 
is  what  it  is  created  for,  and  that  is  what  it  should 
be  used  for;  and  to  that  end,  the  government,  and  the 
government  only,  should  have  control  of  that  guaranty 
for  which  it  alone  stands  sponsor. 

What  a  travesty  to  contemplate  a  private  indi- 
vidual dictating  terms  as  to  time  and  quantity  of  gov- 
ernmental guaranty,  and  this  for  purposes  of  his  own 
private  gain !  These  tokens  of  the  government's  guar- 
anty must  be  permitted  to  flow  freely  for  the  purposes 
intended,  and  they  must  not  be  allowed  to  become 
stagnant  and  clogged  at  the  individual  caprice  of  any- 
one. 

In  the  first  instance,  this  protection  of  an  indi- 
vidual's rights  by  civilized  governments  is  evidenced 
by  money  as  a  matter  of  convenience  only.  The  real 
guaranty  to  the  citizen  is  his  faith  in  his  government. 
This  is.  in  fact,  what  money  is  based  upon.  This  good 
faith  of  the  government  and  the  people,  and  of  the 
people  one  with  the  other,  is  preserved  by  a  simple 
record  of  each  day's  transactions, — book-keeping. 

In  this  system  of  book-keeping,  wherein  each 
transaction  of   the  day  is  conveniently  and  correctly 


The  Origin  of  Money  37 

recorded,  money  is  the  great  day-book ;  the  sum  total 
of  the  entries  therein  must  be  posted  to  the  ledger, 
the  government  bank,  so  that  it, — this  great  day- 
book,— may  be  free  for  entries  on  the  following  day 
by  those  who  so  desire. 

Let  us  use  a  simple  illustration  of  this  book- 
keeping. The  City  of  Seattle  owns  its  street-railway 
system.  Owing  to  the  price  paid  for  this  utility, 
plus  the  interest  charges,  it  became  necessary  to  place 
the  fares  at  8  1/3  cents.  As  this  is  a  sum  which 
cannot  be  paid  in  money,  the  city  adopted  the  expedient 
of  coining  and  issuing  metal  tokens,  each  token  repre- 
senting the  price  of  one  fare. 

For  the  purpose  of  exchanging  credit  for  street- 
railway  service,  these  tokens  thus  became  the  medium 
of  exchange,  and  also  legal  tender,  as  fully  as  those 
functions  apply  to  money.  For  the  purpose  thus  in- 
dicated these  tokens  are  money  in  its  fullest  sense. 

The  depositary  of  these  tokens  is  the  city,  and 
they  are  distributed  through  various  agencies,  the 
most  popular  of  which  consists  of  the  conductors  on 
the  cars.  Thus  the  volume  of  tokens  in  circulation  is 
controlled  by  the  city  and  is  in  such  quantity  that  any 
patron  of  the  railj^way  can  easily  get  the  use  of  them 
to  the  limit  of  his  universal  credit  as  evidenced  by  that 
guaranty — money.  We  never  hear  the  complaint  that 
"tokens  are  tight."  The  idea  that  they  are  a  commod- 
ity to  be  owned  and  controlled  by  individuals  and  used 
for  profit-producing,  or  that  they  can  come  into  the 
hands  of  a  few  and  be  so  hoarded  as  to  produce  a 
panic  and  hard  times  in  the  railway  service,  would  be 
scouted  by  the  most  ordinary  of  minds. 


38  1  he   True  Function  of  Money 

These  tokens  function  freely,  keeping  an  exact 
account  of  the  amount  of  credit  exchanged  daily  for 
service,  and  everything  co-ordinates  with  precision. 
Without  them  a  most  annoying  and  interminable  sys- 
tem of  accounts  would  be  necessary,  which  would 
produce  a  condition  approaching  the  impossible.  As 
the  tokens  are  redeemed  daily  by  the  city,  they  become 
immediately  available  by  the  patrons  of  the  road  for 
further  use. 

Picture  to  youself  the  conditions  if  these  tokens 
were  issued  by  the  city  as  a  commodity,  to  take  their 
place  in  the  world  of  commerce  as  capital.  You  can 
easily  perceive  that  a  few  of  the  patrons  of  the  rail- 
way, who  will  have  the  instincts  of  the  banker  well 
developed,  could  and  would  "corner"  the  tokens  and 
refuse  the  rest  of  the  patrons  the  privilege  of  acquiring 
any,  unless  they  "borrow"  them  and  pay  the  "bankers" 
a  tax  for  their  use.  Yon  can  also  visualize  a  periodi- 
cal scarcity  of  tokens  caused  by  a  refusal  of  those  who 
"own"  and  control  them,  even  to  make  a  "loan." 
This  will  produce  the  spectacle  of  a  fully  equipped 
and  robust  railway  system  standing  ready  to  perform 
its  functions,  on  the  one  side,  and,  on  the  other  side, 
thousands  of  patrons  with  unlimited  credit  desiring  to 
avail  themselves  of  the  service.  Between  them  stand 
the  "bankers"  in  complete  control  of  the  situation  by 
virtue  of  their  control  of  the  medium  which  would 
|)ermit  of  co-ordination.  The  result  of  it  all  would  be 
misery  and  disruption  to  the  patrons ;  bankruptcy  for 
the  railway,  and  destruction  of  the  service. 

As  you  contemplate  this  picture  and  learn  to 
loathe    it,    you    may    truthfully    assure    yourself    that 


The  Origin  of  Money  39 

you  are  gazing  upon  an  exact  replica  of  the  master- 
piece, painted  by  the  bankers  and  money-lenders,  de- 
picting present  conditions  in  the  commercial  world 
as  brought  on  by  the  accepted  idea  that  money  is  a 
commodity. 

If  the  control  of  money  were  retained  by  the 
government  and  a  free  and  adequate  circulation  there- 
by assured,  the  industrial  and  commercial  world  would 
be  as  free  from  economic  upheavals  as  are  the  patrons 
of  the  Seattle  street-railway. 


CHAPTER  V 
THE  PERVERSION  OF  MONEY 

MONEY  is  perverted  from  its  proper  use  by 
conceding  to  it  the  status  of  a  commodity 
and  thus  permitting  it  to  enter  the  field  of 
profit-producing. 

Demanding  and  getting  interest  on  money  results 
in  hoarding  the  same.  Hoarding  money  takes  it  out 
of  circulation ;  taking  it  out  of  circulation  produces 
a  scarcity.  This,  by  the  natural  law  of  supply  and 
demand,  creates  a  market  value.  The  greater  the 
scarcity,  the  keener  the  demand,  and  the  higher  the 
market  value  or  profit.  This  in  turn  accelerates  the 
hoarding  process,  and  so  on  ad  infinitum. 

Money  is  the  blood  of  commerce,  flowing  natur- 
ally through  the  veins  and  arteries  when  commerce  is 
normal.  When  commerce  is  abnormal,  and  congestion 
occurs  at  any  place,  money  should,  and  would  if  per- 
mitted, flow  to  that  place  and  restore  equilibrium,  just 
as  the  blood  does  in  a  living  body.  Should  there  be  a 
demand  for  a  certain  commodity  in  one  locality,  and 
a  surplus  of  the  same  commodity  in  another,  money 
will  pass  readily  to  the  surplus,  supply  the  demand 
and  thus  restore  the  equilibrium. 

It  is  the  water  of  commerce,  constantly  carried 
back  to  its  source,  to  flow  down  the  mountainsides, 
across   the   plains   and  meadows,   ministering  to   the 


The  Perversion  of  Money  41 

wants  of  animal  and  vegetable  life,  causing  all  to  re- 
joice and  revel  in  health  and  happiness. 

M'ould  anyone  believe  that  things  were  as  they 
should  be  if  the  blood,  as  it  courses  through  the  veins 
to  the  heart,  were  not  permitted  to  return  through 
the  arteries,  to  perform  its  natural  function  without 
paying  toll  to  some  private  individual  standing  by  the 
gates  to  the  heart? 

How  long  w^ould  the  dews,  and  the  rains  from 
heaven,  and  the  rivers  and  rivulets  of  the  world  give 
life  to  this  fair  land  if  the  sun  should  fail  to  evap- 
orate the  full  amount  of  that  vital  fluid,  to  be  wafted 
back  to  its  source;  but,  to  the  contrary,  should  levy 
tribute  and  give  back  a  diminishing  supply?  Devasta- 
tion, as  swift  and  sure  as  night  follows  day,  would 
be  the  result. 

Money,  when  first  issued,  is  akin  to  water;  it 
flows  freely  over  the  land ;  it  is  taken  at  its  true  value 
and  moves  easily  for  the  purpose  intended.  Out  it 
rushes  through  natural  channels,  like  w^ater,  slaking 
the  thirst  of  animal  and  vegetable  life.  All  are  w^el- 
come  to  come  and  partake  of  the  bountiful  gifts  of 
God.  Onward  they  flow\  dispensing  joy  and  satisfac- 
tion along  their  paths,  till  the  water  is  finally  dis- 
charged into  the  sea,  and  the  money  into  a  bank,  where 
they  immediately  change  character.  The  water  be- 
comes contaminated  with  the  salt  sea,  and  will  no 
longer  invigorate  the  land ;  the  money  becomes  con- 
taminated with  the  blight  of  interest,  and  no  longer 
animates  commerce.  The  w^ater  must  be  distilled  by 
the  sun  before  it  is  again  fit  to  purify  the  earth;  the 


42  The  True  Function  of  Money 

money  must  be  distilled  by  labor  before  it  can  again 
enrich  the  fields  of  commerce.  The  sun  distils  and 
gives  back  freely  every  drop  of  water ;  labor  can  dis- 
til but  a  percentage  of  the  money  deposited  in  a  bank. 
The  remainder  is  left  in  the  hands  of  those  who  have 
no  right  thereto, — the  bankers  and  money-lenders, — 
to  be  used  as  the  instrument  with  which  they  exact 
the  fruits  of  labor  from  a  suffering  and  struggling 
humanity. 

The  rapidity  of  interest  accumulation  is  realized 
but  by  a  very  few.     A  tabulated  statement  exhibiting 
this  phenomenon  will  be  interesting  and  instructive : 
Money  at    4%  simple  interest  doubles  in  25  years. 
Money  at    4%  compounded  yearly  doubles  in  17.6  yrs. 
Money  at    5%  simple  interest  doubles  in  20  years. 
Money  at    5%  compounded  yearly  doubles  in  14.2  yrs. 
Money  at    8%  simple  interest  doubles  in  12.5  years. 
Money  at    8%  compounlled  yearly  doubles  in  9  years. 
Money  at  10%  simple  interest  doubles  in  10  years. 
Money  at  10%  compounded  yearly  doubles  in  7.2  years. 
Money  at  12%  simple  interest  doubles  in  8.3  years. 
Money  at  12%  compounded  yearly  doubles  in  6.1  years. 

Compared  with  the  profits  in  some  lines  of  specu- 
lation, for  a  short  while,  these  gains  seem  small;  but 
when  we  consider  that  they  are  certain  and  will  con- 
tinue forever,  and  are  constantly  augmenting  the  earn- 
ing power  of  money  and  correspondingly  decreasing 
the  amount  in  circulation  in  the  hands  of  the  honest 
investor,  one  may  readily  see  the  enormous  gains  that 
eventually  result. 

If  commotlities  and  money  were  left  in  their  proper 


The  Perversion  of  Money  43 

spheres,  that  is.  the  commodity,  the  real  value  and 
producer  of  profits ;  and  the  money,  a  mere  lieu  or 
factor  of  exchange,  with  no  real  value,  and  non- 
profit-producing ;  it  does  not  require  a  very  profound 
deduction  to  conclude  that  the  commodity  would  be 
the  thing  of  interest,  and  the  money  a  mere  auxiliary 
thereto.  Money  would  be  seeking  investment ;  there 
would  be  no  incentive  to  hoard  and  withhold  it  from 
use. 

That  this  natural  and  logical  condition  does  not 
exist  is  patent.  That  the  dollar  is  king  and  master 
is  evident  to  us  all.  That  money  has  acquired  an 
unnatural  value  and  power  is  apparent.  Money  has 
become  the  master,  commodities  the  servelings.  To 
have  accomplished  this,  money  must  have  met  com- 
modities in  the  open  field  with  favors  and  come  ofT 
the  victor.  Money  must  indeed  have  become  the  com- 
modity, the  profit-producer,  and  the  true  commodity 
a  mere  incident,  or,  at  best,  a  very  poor  second.  It 
has  been  permitted  to  enter  a  perverted  channel  and  to 
become  a  producer  of  profit ;  something  entirely  for- 
eign to  its  original  and  only  intended  use. 

This  new  use,  or  rather  abuse,  of  money  brings 
its  natural  results.  It  is  now  to  the  interest  of  the 
profit-seeker  to  hoard  money,  take  it  out  of  circulation, 
bend  his  energies  to  the  accumulation  of  cash,  and 
despise  the  production  of  useful  commodities. 

We  have  seen  that  the  only  use  for  which  money 
was  called  into  being  is  to  assist  in  economically  trans- 
acting business.  It  is  merely  an  incident  of  commerce, 
secondary  and   subservient   to  the   various   commodi- 


44  The  True  Function  of  Money 

ties,  in  the  economical  exchange  ol  which  it  is  but  an 
humble  servant.  It  is  the  blood  of  commerce,  carrying 
its  red  corpuscles,  gold,  and  its  white  corpuscles,  sil- 
ver, throughout  the  commercial  world. 

As  long  as  money  is  left  to  its  legitimate  use,  it 
flows  readily,  constantly  seeking  investment  in  labor  or 
some  profit-producing  commodity.  Under  the  present 
system  it  is  used  to  cripple  industry  and  to  stagnate 
commerce. 

We  will  assume  that  the  great  struggle  between 
money  on  one  side,  and  capital  and  labor  on  the  other, 
were  simmered  down  to  a  simple  transaction  between 
two  individuals ;  one  with  the  productive  capacity  of 
brain  and  brawn,  the  other  with  a  bag  of  money.  The 
first  is  actively  engaged  in  producing  something  to 
gladden  the  heart  of  man ;  the  other  is  stolidly  seated 
on  his  bag  awaiting  the  day  when  the  first  shall  feel 
the  effect  of  the  scarcity  of  the  medium  of  exchange, 
the  legal  tender,  and  by  law  must  come  to  him  to  get 
it.  Thus,  by  a  stroke  of  a  pen,  he  can  take  from  the 
real  producer  of  wealth  all  the  surplus  of  his  earn- 
ings ;  in  other  words,  exploit  him. 

A  young  man,  rich  in  brawn  and  with  a  fine  and 
active  brain,  will,  under  the  present  system,  find  him- 
self at  a  loss  to  acquire  some  needed  legal  tender  with 
which  to  discharge  his  obligations.  He  applies  to  the 
only  source  where  he  can  get  it,  to  the  man  who  has 
it  all  hoarded  and  out  of  circulation,  awaiting  this 
very  moment.  He  will  say :  "I  am  a  young  man,  strong 
and  active,  and  I  apply  to  you  to  exchange  some  of 


The  Perversion  of  Money  45 

your  hoard  of  legal  tender  for  some  of  my  labor." 
The  money-lender  responds :  "If  I  employ  you,  and 
agree  to  pay  you  wages,  that  is,  agree  to  give  you 
some  of  my  legal  tender  for  your  labor,  I  will  be  ex- 
changing a  certain  profit-producer,  money,  for  a  very 
uncertain  profit-producer,  labor.  My  money  will  pass 
from  me  forever,  and  in  its  place  I  accept  an  article 
which  enters  into  direct  competition  with  all  other 
articles  of  its  kind, — one  of  the  very  articles  which 
now  stand  as  a  bulwark  between  my  money  and  loss. 
It  would  not  be  good  business;  my  profits  would  be 
too  uncertain  and  my  danger  of  loss  would  not  be 
properly  safeguarded.  I  must  decline  to  let  you  work 
for  any  of  that  article  which  the  law  says  you  must 
have  in  order  to  discharge  your  obligations.  How- 
ever, if  you  will  hypothecate  the  accumulations  of  your 
past  life  to  me,  and  agree  to  give  me  the  profit  from 
your  future  earnings,  I  will  loan  you  the  required 
amount." 

"But,"  expostulates  the  victim,  "if  I  do  that,  I 
will  become  your  slave  forever,  as  I  can  never  return 
the  principal,  and  in  a  short  while  you  will  foreclose 
and  take  from  me,  according  to  law,  all  which  I  have." 

The  money-lender  replies,  "If  you  do  not  borrow 
from  me  sufficient  of  that  article  which  the  law  says 
is  legal  tender,  to  comply  with  the  demands  of  your 
creditors,  that  selfsame  law  will  declare  you  a  bank- 
rupt, and  you  will  of  a  certainty  lose  all  you  have. 
If  you  borrow  of  me,  and  agree  to  become  my  slave, 
you  have  one  chance  in  ten  thousand,  during  the  suc- 
ceeding years  of  your  life,  of  having  the  wheel  of 


46  The   True  Function  of  Money 

fortune  so  turn  that  you  will  be  mercifully  delivered 
from  this  bondage." 

"I  cannot  see  how  you  can  be  so  unjust,"  observes 
the  victim. 

"Tut !  tut !"  replies  the  money-lender  suavely, 
"you  forget  that  I  am  foregoing  for  a  time  the  use  of 
this  money." 

"Well,  if  you  have  any  use  for  the  money,  how 
does  it  happen  that  you  can  spare  any  of  it  to  loan?" 
asks  the  victim.  "I  have  people  owing  me  who  are 
in  the  same  condition  that  I  am.  If  they  could  get 
money  and  pay  me,  I  could  discharge  my  obligations. 
Go  ahead  and  use  your  money  for  the  purposes  for 
which  it  was  intended.  Employ  labor,  purchase  some 
legitimate  commodity,  and  it  will  do  me  as  much  good 
and  will  have  the  added  blessing  that  I  \\\\\  not  be- 
come your  slave." 

"Exactly,"  smiles  the  money-lender.  "But  I  have 
a  better  use  for  my  money.  I  am  going  to  loan  it 
either  to  the  man  who  owes  you,  or  to  the  man  who 
owes  him.  I  am  not  particular  who  first  becomes  my 
slave.  Sooner  or  later  I  will  have  you  all.  As  I  am 
an  eminent  financier,  lauded  and  emulated,  I  do  not 
stoop  to  note  a  little  thing  like  that.  Think  promptly 
and  act  with  decision ;  it  is  the  secret  of  success  in 
business.  You  must  choose  now,  and  choose  quickly, 
between  certain  bankruptcy  and  a  period  of  years  of 
bondage.  One  tenders  you  nothing  but  the  shame  and 
disgrace  of  failure,  with  its  taunts  of  bad  management 
and  incompetency ;  the  other,  secrecy,  the  staving  off 
of  the  fatal  day,  and  the  hope  that  some  time  you  may 


The  Perversion  of  Money  47 

have  the  good  luck  to  be  released  from  servitude  and 
again  be  a  free  man." 

The  young  man  grasps  the  situation.  With  a 
sinking  heart,  he  bows  his  head  and  meekly  receives 
the  yoke. 

This  picture  is  not  overdrawn.  It  is  the  actual 
condition  in  the  business  world  today.  Nor  is  this 
the  worst.  If  the  transaction  could  be  confined  to 
the  actual  borrower  and  lender,  there  would  be  hope 
that  this  traffic  in  human  misery  would  be  brought 
to  an  end.  But  it  is  not  so  confined.  Our  govern- 
ments, State,  city  and  county,  are  industriously  bor- 
rowing for  us  and  pledging  our  labor  to  a  coterie  of 
rapacious  bond-buyers.  Every  railroad,  every  steam- 
ship company,  every  industry,  a  vast  majority  of  the 
farmers  who  produce  our  food-stuffs,  are  borrowing 
for  us  and  passing  the  burden  along  to  their  patrons 
and  customers,  as  an  indirect  tax,  to  be  bled  and  torn 
from  their  hearts.  And  all  this  based  upon  the  same 
peculiar  logic. 

The  money  of  the  world  is  in  the  hands  of  the 
professional  money-lenders  and  bankers.  In  order 
to  finance  any  project  of  today,  it  is  necessary  to  call 
upon  them  for  the  funds.  It  is  impossible  to  persuade 
them  to  make  a  legitimate  investment ;  that  is,  one 
where  they  will  have  to  assume  their  just  share  of 
loss.  It  is  much  better  for  them  to  adjust  matters 
so  that  they  will  have  the  lion's  share  if  profits  re- 
sult, and  immunity  from  loss  if  such  occurs.  Hence, 
to  accomplish  any  given  object  in  the  commercial 
world,  the  projectors  thereof   must  assume  all  loss, 


48  The  True  Function  of  Money 

guarantee  profit  to  the  money-lenders,  and  pledge  the 
whole  project  to  this  end.  This  places  the  business 
world  at  the  mercy  of  those  who  traffic  in  the  people's 
money. 

How  different  it  would  be  if  the  money-lending 
class  were  eliminated,  and  every  one  compelled  to  in- 
vest his  money  in  its  true  sense ! 

We  have,  in  the  last  few  years,  heard  very  much 
of  the  necessity  of  governmental  control  from  one 
school  of  thinkers,  and  of  government  ownership  from 
another  school.  It  is  a  significant  fact  that  the  cor- 
porations whose  colossal  disregard  of  the  rights  of  the 
people  has  given  rise  to  discussions  of  these  differing 
methods  of  solution,  are  corporations  whose  existence 
was  made  possible  by,  and  whose  actual  organization 
was  the  direct  act  of,  the  power  engendered  by  inter- 
est on  money.  Every  line  of  industry  which  has  been 
united  so  as  to  control  prices,  that  is,  "trustified,"  has 
received  this  treatment  at  the  hands  of  the  banks. 
Independent  concerns  were  bought  at  fabulous  prices, 
placed  in  a  trust,  and  the  price  of  the  products  con- 
trolled ;  and  all  by  virtue  of  the  enormous  amount  of 
bonds  purchased  by  the  banks  and  the  money-lenders, 
the  burden  of  which  is  laid  directly  upon  the  people 
as  an  indirect  tax. 

With  every  trust  and  with  every  corporajtion 
there  is  a  stock  issue.  This  stock  is  for  the  people 
just  as  far  as  they  will  invest.  Every  dollar  thus  in- 
vested by  the  people  in  stock  widens  the  margin  of 
security  for  the  bonds  owned  by  the  banks.  In  other 
words,  the  banks  and  money-lenders  never  intended  to 


The  Perversion  of  Money  49 

do  more  than  loan  money  on  bonds;  and  by  "trusti- 
fying" the  concern  they  control  the  earnings  and  there- 
by make  the  interest  more  certain,  and  a  narrower 
margin  of  security  may  be  maintained. 

The  system  of  interest  on  money  has  already  re- 
sulted in  a  condition  so  alarming  that  one  stands 
aghast  at  its  danger.  No  undertaking  of  any  mag- 
nitude can  be  consummated  without  the  consent  and 
assistance  of  the  Wall  Street  interests. 

The  only  way  to  relieve  those  interests  of  the 
duty  of  private  tax-collectors  is  to  stop  traffic  in  the 
people's  money. 

It  is  suicide  for  people  to  vote  municipal  bonds 
in  the  belief  that  they  are  putting  money  into  circu- 
lation and  thereby  securing  employment.  The  money 
thus  earned  by  them  is,  after  all,  but  borrowed  money, 
and  must  be,  by  them,  returned,  every  penny,  with 
interest.  They  are  simply  adding  fuel  to  the  flame 
which  is  consuming  them.  They  are  drunkards  beg- 
ging at  the  bar  for  one  more  drink.  It  gives  them  a 
moment's  satisfaction  at  the  price  of  an  acute  aggra- 
vation of  hell's  torments  which  are  sure  to  follow. 
The  good,  if  any  there  be,  in  this  custom  of  borrowing 
money,  sinks  into  utter  nothingness  when  compared 
with  its  widespread  iniquity.  Money  drawing  unto 
itself  more  of  its  exact  self,  and  without  the  slight- 
est risk,  effort,  or  loss,  is  a  hideous  monster  which 
fattens,  grows  strong  and  becomes  arrogant  on  a  diet 
of  its  own  vomit. 

Nothing  performs  service  for  mankind  without 
parting  with  some  of  its  vital  substance.     It  is  this 


50  The  True  Function  of  Money 

vital  substance  which  is  converted  into  the  material 
wealth  of  the  world.  Money  parts  with  no  vital  sub- 
stance. It  is  merely  the  medium  of  exchange  for  the 
items  which  go  to  make  up  this  wealth ;  mere  certi- 
ficates of  deposit,  declaring  that  the  owner  has  a  credit 
of  just  so  much  in  the  world's  wealth,  but  which  he 
cannot  withdraw  unless  he  surrenders  the  certificate. 

We,  the  people,  are  the  owners  of  the  wealth  of 
the  world.  Money  constitutes  the  credit-slips,  or  cer- 
tificates of  deposit,  which  we  use  as  a  matter  of  con- 
venience and  are  all  hoarded  in  the  hands  of  money- 
lenders and  the  banks.  These  slips  or  certificates  are, 
by  law,  made  legal  tender.  We  must  meet  our  obli- 
gations with  legal  tender.  These  credit-slips  or  cer- 
tificates of  deposit,  under  the  present  system,  are  more 
productive  of  profit  than  are  the  items  of  wealth  for 
which  they  stand.  The  law  makes  it  incumbent  upon 
us  to  get  them.  Un'der  this  system  we  are  compelled 
to  borrow  them,  and  must  pay  for  this  a  ruinous  rate 
of  interest. 

We  are  told  in  the  books  that  the  reason  why 
money  should  be  placed  in  the  realms  of  earning,  or 
profit-producing  commodities,  is  that  the  money-lender 
is  foregoing  the  use  of  it  during  the  period  for 
which  it  is  loaned,  and  that  he  should  be  recompensed 
for  this  forbearance ;  that  is  to  say,  if  he  did  not  loan 
the  money  to  someone,  he  could  and  would  invest  it 
in  a  way  which  would  bring  him  profit.  This  is  a 
false  and  unwarranted  assumption.  Why  should  we 
conclude  as  a  fact,  beyond  peradventure  of  a  doubt, 
that  his  investment  would  prove  profitable, — then  bor- 


The  Perversion  of  Money  51 

row  his  money,  do  all  the  work,  suffer  all  the  anxiety 
and  take  all  the  chances  on  loss  and  bind  ourselves 
to  make  it  doubly  sure  that  his  money  will  be  a  win- 
ner? 

To  the  contrary,  the  professional  money-lender, 
one  who  has  done  nothing  through  life  but  gain  his 
substance  from  the  people  via  the  interest  route,  is 
usually  unsuitable  by  temperament  or  experience  to 
invest  his  money  judiciously;  and  it  would  be  a  much 
more  reasonable  assumption  that  his  ventures  would 
be  failures.  Yet  an  idea  has  gone  abroad  that  if  the 
money-lender  did  not  accommodate  (?)  someone  with 
a  loan,  he  surely  would  make  as  much  and  more  by 
investing  the  money  himself ;  and  a  thoughtless  world 
surrenders  to  this  reasoning. 

Primarily,  laborers  are  to  be  paid  in  that  for  which 
they  were  laboring — clothing. food. etc. — and  to  have 
the  same  delivered  to  their  respective  markets.  This 
method  has  been  found  impractical,  and  civilized 
nations  have  therefore  hit  upon  the  expedient  of  the 
employer's  giving  and  the  laborer's  accepting  tokens 
of  credit.  These  tokens  are  the  tangible  representa- 
tives of  money,  and  it  wnll  be  particularly  noted  that 
in  the  correct  course  of  business  they  must  be  fully 
surrendered  before  any  of  the  wealth  for  which  they 
call  will  be  delivered.  Loaning  these  tokens  to  the 
depositary  does  not  have  the  effect  of  gaining  posses- 
ion of  the  wealth.  The  only  way  the  employer  has 
to  get  these  tokens  of  credit  is  to  borrow  them,  and 
he  pays  the  laborer  with  borrowed  money.  It  is  a 
self-evident  fact,  an  axiom,  that  a  dollar  borrowed  re- 


52  The  True  Function  of  Money 

mains  a  borrowed  dollar  till  returned  to  the  owner, 
no  matter  whose  nor  how  many  hands  it  has  passed 
through.  The  laborer  takes  this  money  and  feels  that 
it  is  really  his.  He  assures  himself  that  these  dollars 
are  exactly  what  he  was  laboring  for,  and  he  is  aware 
that  he  can  take  them  to  the  world's  clearing-house 
and  exchange  them  for  their  face  value.  He  is  con- 
tent to  rest  at  that.  He  can  realize  only  the  outward 
manifestation;  he  cannot  conceive  that  there  is  any 
trick  about  it.  Let  us  see : 

Now,  if  those  dollars  were  really  his,  and  he  ex- 
changed them  for  wealth,  he  would  part  with  the  dol- 
lars, accept  the  wealth,  and  have  no  further  concern. 
This  is  not  true  of  his  borrowed  wages.  When  he 
accepted  those  borrowed  dollars  in  payment,  he  accept- 
ed them  with  the  same  demands  thereon  that  they  had 
in  the  hands  of  his  employer;  that  is,  in  nine  years 
to  be  returned,  and  as  much  more  with  them.  When  he 
exchanges  them  for  wealth,  he  is  still  beholden  to  his 
employer  to  pay  interest  thereon,  which  we  have  seen 
will  amount  to  a  like  sum  in  nine  years  at  eight  per 
cent  per  annum  compounded.  Hence  it  devolves  up- 
on every  laboring  man  to  earn  the  amount  of  this  in- 
terest every  nine  years  and  present  it  to  his  employ- 
er, that  his  employer  may  have  the  use  of  the  money 
from  the  money-lender. 

This  is  the  difference  between  laboring  for  a  legit- 
imate medium  of  exchange  and  laboring  for  borrowed 
dollars.  If  one  labors  for  properly  invested  dollars, 
he  would  take  his  pay  and  the  transaction  would  be 
closed.     If,  however,  he  is  laboring  for  borrowed  dol- 


The  Perversion  of  Money  53 

lars,  he  must  then  begin  to  pay  interest  on  his  earn- 
ings. 

This  principle  cannot  be  impressed  too  firmly  up- 
on your  mind.  The  original  borrower  of  money  does 
not  propose  to  pay  either  the  principal  or  interest  him- 
self. He  intends  to  pass  that  duty  along  to  the  ulti- 
mate consumer,  and  will  make  his  collections  by  adding 
the  amounts  to  the  price  of  his  wares.  W^hen  he  pays 
this  borrowed  money  to  a  third  party,  as  to  an  em- 
ployee, for  example,  the  employee  labored  therefor  just 
the  same  as  though  he  was  earning  it;  when,  in  fact, 
he  is  laboring  for  the  privilege  of  taking  his  employ- 
er's place  as  a  borrower ;  in  short,  he  is  laboring  only 
for  a  loan.  He  is  not  really  laboring  for  the  money, 
but  for  the  credit  which  the  money  will  guarantee  and 
measure.  W't  will  assume  -that  he  labors  one  day 
and  receives  therefor  a  borrowed  dollar  in  payment. 
With  this  dollar  he  purchases  a  meal  of  victuals.  Now 
as  a  fact,  he  has  earned  that  meal  with  his  day's 
labor.  He  has  paid  for  it  in  full,  and  the  transaction 
should  be  closed.  He  thinks  it  is.  He  little  dreams 
that  he  will  now  commence  to  pay  interest  on  that  meal 
and  will  continue  so  to  do  as  long  as  the  debt  remains 
unpaid  to  the  original  lender.  This  is  the  condition 
of  the  laboring  man  and  of  all  consumers,  notwith- 
standing that  they  have  not  borrowed,  and  cannot  bor- 
row, a  dollar  directly.  They  are  made  the  goat  of 
that  unfortunate  system  which  can  be  sustained  only 
upon  the  false  conception  that  money  is  capital.  The 
evil  of  this  system  is  plain.  The  people  have  no  voice 
as  to  whether  the  loan  shall  or  shall  not  be  made ;  and. 


54  The   True  Function   of  Moncv 

when  made,  they  have  no  say  about  the  rate  of  inter- 
est to  be  paid.  The  captains  of  industry  fix  the  amount 
of  our  loans  and  set  the  rates  of  interest  thereon,  and 
the  people  are  bound  to  meet  the  demand.  It  is  use- 
less to  contend  that  this  is  a  matter  of  private  con- 
tract between  the  borrower  and  the  lender.  The 
people,  the  real  parties  in  interest,  are  not  permitted 
to  be  parties  to  the  contract. 

In  this  respect,  they  are  like  the  slaves  of  old, 
whose  condition  in  that  day  was  justified  by  phil- 
osophical sophists,  on  the  ground  that  they  were  parties 
to  a  contract.  One  of  these  pseudo-philosophers  was 
arguing  to  Voltaire  upon  the  correctness  of  this  view, 
whereupon  Voltaire  replied :  'T  cannot  believe  it  to  be 
true,  unless  you  show^  me  a  copy  of  that  contract,  signed 
by  the  party  who  is  to  become  the  slave." 

We  now  clearly  understand  that  all  the  money  in 
circulation  among  the  people,  and  which  they  think  is 
really  theirs,  is  in  fact  borrowed  money,  owned  by 
no  one  but  the  money-lenders ;  further,  that  this  mon- 
ey which  the  people  think  is  theirs  is  bearing  inter- 
est, and  that  the  people  are  paying  this  interest,  and 
that  also  in  cash,  borrowed  in  the  same  way :  thus  bor- 
rowing money  to  pay  interest  on  borrowed  money. 

"A  vampire,"  as  defined  by  Webster,  "is  a  dead 
person  superstitiously  believed  to  return  in  body  and 
soul  from  the  other  world,  and  to  wander  about  the 
earth  doing  every  kind  of  mischief  to  the  living,  and 
to  suck  the  blood  of  persons  asleep,  thus  causing  their 
death.  Hence,  one  who  lives  by  preying  on  others ; 
an  extortioner." 


The  Perversion  of  Money  55 

Money,  permitted  to  assume  the  role  that  it  does 
under  the  present  system,  is  the  colossal  vampire  of 
today.  It  is  not  a  creature  of  superstitious  imagery, 
but  is  a  living  personification  of  fact.  It  excels  the 
mythical  vampire,  as  it  does  not  need  to  remain  in  per- 
son while  sucking  the  blood  of  persons  asleep.  It 
needs  to  be  present  but  one  year,  at  which  time  it  will 
be  partially  relieved;  and,  at  the  end  of  nine  years, 
working  on  an  eight  per  cent  basis,  it  will  be  fully 
released  from  personal  supervision  of  its  "industry ;" 
yet,  although  it  is  thus  released,  and  has  gone  to  other 
"attractive  investments,"  the  wound  in  the  first  victim 
never  heals,  but  continues  to  flow  its  fuTI  quota  of 
blood,  to  be  delivered  to  the  vampire  at  certain  fixed 
times.  The  victim  dies  a  lonesome,  lingering  death, 
without  gaining  consciousness. 


CHAPTER  VI 

THE  FALLACY  OF  INTEREST 

THE  custom  of  securing  money  against  loss,  and 
guaranteeing  it  a  profit,  was  in  olden  times 
denounced  as  unlawful  and  immoral.  The  evils 
of  the  system  were  felt  by  the  Jews  in  Old  Testa- 
ment days : 

"And  there  was  a  great  cry  of  the  people,  and 
of  their  wives*  *  *  *  we  have  mortgaged  our  lands, 
vineyards,  and  houses,  that  we  might  buy  corn,  because 
of  the  dearth  *  *  *  *  we  have  borrowed  money  for 
the  king's  tribute  *  *  *  *  Yet  now  our  flesh  is  as  the 
flesh  of  our  brethren,  our  children  as  their  children ; 
and.  lo,  we  bring  into  bondage  our  sons  and  our  daugh- 
ters to  be  servants,  and  some  of  our  daughters  are 
brought  unto  bondage  already;  neither  is  it  in  our 
power  to  redeem  them;  for  other  men  have  our  lands 
and  vineyards.  *  *  *  *  I  rebuked  the  nobles,  and  the 
rulers,  and  said  unto  them.  Ye  exact  usury,  every  one 
of  his  brother  *  *  *  *  \\'e  after  our  ability  have  re- 
deemed our  brethren — the  Jews,  which  were  sold  unto 
the  heathen ;  and  will  ye  even  sell  your  brethern  ?  or 
shall  they  be  sold  unto  us?  Then  held  they  their  peace, 
and  found  nothing  to  anszi'er.  Also  I  said.  It  is  not 
good  that  ye  do :  ought  ye  not  to  walk  in  the  fear  of 
our  God?  *  *  *  *  I  pray  you,  let  us  leave  off  this 
usury.  *  *  *  *  Then  said  they,  We  will  restore  them, 
and  will  require  nothing  of  them." — Nehemiah,  5:1-12. 


The  Fallacy  of  Interest  57 

In  those  days  interest  in  any  form  was  termed 
usury. 

"He  hath  given  forth  upon  usury,  and  hath 
taken  increase  *  *  *  he  shall  surely  die ;  his  blood 
shall  be  upon  him." — Ezekiel,  18:13. 

Aristotle  condemns  interest  as  vicious,  holding 
that  money  is  "naturally  barren,"  and  that  to  make 
it  "breed  money"  is  preposterous  and  a  perversion  of 
the  end  of  its  institution,  which,  he  declared,  was  to 
serve  as  a  "medium  of  exchange"  and  not  for  pur- 
poses of  increase. 

The  Christian  Church  and  laymen  early  con- 
demned the  custom,  and  held  any  interest  to  be  usury 
and  against  good  morals.  The  secular  law  followed, 
and  the  taking  of  interest  was  forbidden  in  England 
from  the  reign  of  King  Albert  in  the  ninth  century 
to  the  time  of  Henry  VHL  At  that  time,  1545,  in- 
terest at  10%  was  permitted.  Seven  years  later,  dur- 
ing the  reign  of  his  successor,  Edward  Vl.  interest  was 
again  prohibited,  A.  D.  1552.  This  was  the  status  of 
the  question  till  the  reign  of  Anne,  1713,  when  interest 
was  again  legalized  and  the  rate  fixed  at  3%.  and  it 
was  not  till  the  year  1854,  during  the  reign  of  Victoria, 
that  all  restrictions  were  taken  ofif  and  the  institution 
recognized  as  a  factor.* 

*"The  first  gold  and  silver  coins  were  brought  from 
Asia  to  Hellas  as  an  article  of  Commerce.  Gradually  they 
came  into  use  as  money.  After  the  State  had  commenced 
to  coin  its  own  money,  for  a  long  time  there  existed  only  a 
small  amount  of  coined  money  in  the  land,  and  this  was 
chiefly  in  the  hands  of  the  men  of  business  and  merchants. 
As  soon  as  money  ceased  to  be  an  article  of  trade  like  other 
articles  coming  on  the  market,  when  even  the  poorer  classes 
could  not  exist  without  it — the  laws  of  debt  prevailing  in 


58  The   1  rue  Function  of  Money 

Today  the  custom  has  become  so  venerable,  that 
it  is  accepted  by  the  world  as  a  thing  of  justice  and 
right.  Philosophers  in  political  economy  look  upon 
the  custom  as  founded  in  sound  principle,  and  seem  to 
recognize  it  as  an  essential  factor  in  the  civilized 
world.  They  attempt  to  analyze  the  cause  and  eflfect 
of  high  and  low  interest,  but  never  seem  able  to  de- 
tect the  falseness  of  the  foundation  upon  which  the 
institution  is  builded. 

It  was  probably  a  manifestation  of  like  shortcom- 
ings which  animated  Thomas  De  Quincey  to  publish 
his  somewhat  uncomplimentary  opinion  of  this  class 
of  scientists  and  their  works :  "I  saw  that  these  were 
generally  the  very  dregs  and  rinsings  of  the  human  in- 
tellect ;  and  that  any  man  of  sound  head  and  prac- 
ticed in  wielding  logic  with  scholastic  adroitness  might 
take  up  the  whole  academy  of  modern  economists 
and  throttle  them  between  heaven  and  earth  with  his 
finger  and  thumb,  or  bray  their  fungus  heads  to  pow- 
der with  a  lady's  fan.  "  As  we  have  seen,  the  prime 
cause  assigned  for  the  necessity  and  justice  of  loan- 
ing money  and  collecting  interest  thereon  is,  that  the 

the  interest  of  the  proprietors, — money,  like  a  poisonous 
plant,  absorbed  and  consumed  the  strength  of  the  land." — 
Curtius's  History  of  Greece. 

"Although  the  monarchy  had  been  abolished,  the  people 
of  Rome  by  no  means  enjoyed  the  blessings  of  a  free  gov- 
ernment. All  political  power  was  in  the  hands  of  the  pa- 
tricians, and  plebeians  were  kept  in  a  condition  of  great 
social  degradation.  Obliged  to  borrow  money  of  their  rich 
neighbors,  they  were  charged  enormous  rates  of  interest, 
and  when  unable  to  pay  were  delivered  by  the  cruel  laws 
to  the  mercy  of  their  creditors,  who  deprived  them  of  their 
lands,  and  reduced  them  to  the  condition  of  serfs  or  slaves." 
— Anderson's  New  General  History. 


The  Fallacy  of  Interest  59 

money  lender  is  foregoing  the  use  of  the  money  for  the 
time  specified  in  the  loan,  and  hence  should  be  recom- 
pensed therefor.  This  idea  that  the  money-lender  is 
foregoing  the  use  of  the  money  is  a  fallacy,  failure  in 
the  perception  of  which  has  permitted  and  still  permits 
this  gigantic  trick  to  be  played  upon  honest  industry. 
Let  us  take  the  man  who  has  acquired  such  suf- 
ficiency of  money  that  he  resolves  to  cease  business 
strife  and  spend  his  remaining  days  in  ease  and  re- 
creation. His  money  is  in  a  safe-deposit  box  and  he 
is  at  home,  with  the  full  determination  that  he  will 
never  again  use  a  dollar  of  it  in  any  enterprise.  His 
expectancy  of  life  is,  say.  twenty  years.  If  he  loans 
his  neighbor  one-fourth  of  his  money  for  a  period 
of  three  years,  and  at  the  end  of  that  time  the  money 
is  returned,  then  can  it  be  said  that  the  money-lender 
has  foregone  any  use  of  the  money?  Or.  suppose  he 
has  his  money  deposited  in  a  checking  account  at  a 
bank.  As  far  as  he  is  concerned,  he  has  foregone  the 
use  of  the  money  to  the  bank,  for  which  he  receives 
nothing.  The  banker  does  not  forego  the  use  of  the 
money,  for  it  is  not  his  to  use.  in  the  first  place ;  and, 
secondly,  the  only  privilege  granted  him  by  the  owner 
is  to  loan  it.  That  brings  us  to  the  central  thought. 
The  only  use  a  money-lender  has  for  money  is  to 
hoard  and  loan  it,  and  the  only  foregoing  he  suffers 
is,  that  if  he  loans  it  to  one  he  must  forego  loaning 
it  to  another.  If  he  accepts  one  as  his  slave,  he  must 
forego  the  pleasure  of  having  the  other  garnering 
his  cotton.  The  money-lender  never  intends  to  in- 
vest  one   dollar   in   legitimate   enterprises ;   he   never 


60  The  True  Function  of  Money 

foregoes  the  use  of  money  in  that  way.  Wall  Street 
money, — and  by  that  I  mean  what  is  known  as  bank 
money, — is  held  sacredly  for  the  one  purpose  of  draw- 
ing interest  unto  itself.  A  banker  found  investing 
any  of  this  sacred  hoard  in  a  legitimate  enterprise, 
i.  e.,  any  enterprise  where  the  money  must  stand  its 
just  share  of  the  loss,  if  such  there  be.  will  be  shunned 
by  his  brethren  in  the  fraternity,  as  a  thing  unclean. 
He  will  to  them  be  a  heretic  and  a  traitorous  back- 
slider, for  has  he  not  violated  all  the  sacred  canons 
of  the  interest-gathering  creed?  This  cardinal  pre- 
cept, of  never  investing  hoarded  money  in  any  legit- 
imate enterprise,  is  more  jealously  guarded  than  any 
maxim  or  tenet  of  the  most  dogmatic  of  faiths. 

Is  it  not  true  that,  should  these  non-conformists 
become  too  plentiful,  the  whole  structure  would  crum- 
ble and  fall?  If  too  much  of  this  hoarded  money 
should  get  into  the  channels  of  trade  in  its  proper, 
just,  and  fair  way,  i.  e..  with  the  full  and  honest  as- 
sumption of  its  share  of  the  losses,  when  losses  are 
in  order,  the  time  would  soon  arrive  when  no  one 
woubl  need  to  borrow  from  the  banker,  as  the  cause 
thereof,  to-wit,  the  scarcity  of  money,  caused  by 
hoarding,  would  be  a  thing  of  the  past.  The  world 
would  be  immeasurably  benefited  if  the  whole  indus- 
try of  foregoing  were  uprooted.  To  accomplish  this, 
it  will  be  necessary  only  to  render  the  enterprise  un- 
profitable. By  removing  the  incentive  in  private  indi- 
viduals to  hoard  (interest)  and  by  refusing  to  money 
safe-conduct   asrainst  loss,   it  will  be   returned  to   the 


The  Fallacy  of  Interest  61 

of  legitimate  trade,  and  the  golden  calf  will  become  a 
multitude  of  fatted  calves. 

No  nation  ever  felt  the  need  of  buying  bullion 
and  coining  money  to  the  end  that  some  of  its  citizens 
might  hoard  the  same  to  their  own  use,  as  an  instru- 
ment to  exact  tribute  from  the  great  mass  of  the 
people.  No  nation  ever  foresaw  the  necessity  of  those 
people  having  to  pay  tribute  to  an  aggregation  of  pri- 
vate citizens  for  the  use  of  that  article  which  the 
government  intended  should  flow  freely  as  the  medium 
of  exchanging  commodities.  What  could  be  a  more  dis- 
tressing phenomenon  than  that  of  an  article,  bought 
by  the  government  and  distributed  to  the  people,  for 
a  specific  purpose  and  for  the  good  of  all,  being  hoarded 
by  the  money-lenders  and  converted  into  a  profit-pro- 
ducing commodity?  This  strange  accomplishment  is 
made  possible  by  the  fact  that  this  metamorphosed 
"commodity"  still  retains  the  function  of  a  legal  tender. 
This  is  bound  to  produce  a  demand  or  market.  This 
demand  grows  keener  and  keener, — finally  distressing. 
Business  cannot  be  carried  on  without  this  medium. 
The  result  is,  the  gross  injustice  of  the  honest  toiler 
being  compelled  to  sacrifice  the  fruits  of  his  labor  to 
the  money-lenders  for  the  use  of  that  article  which 
the  government  intended  should  be  the  prize  of  con- 
quest. 

That  it  is  wrong  to  pervert  money  from  its  ori- 
ginal and  only  use  to  that  of  a  profit-producing  com- 
modity will  be  more  readily  understood  by  a  simple 
illustration  involving  the  same  principle. 

Let  us  assume  that  the  government  has  an  army 


62  The  True  Function   of  Money 

stationed  at  St.  Louis,  Mo.  This  army  constitutes, 
for  our  purpose,  the  people  of  the  United  States,  and 
the  officers  thereof  the  money-lending  contingency. 
The  Indians  of  Western  Montana  declare  war,  and  it 
becomes  necessary  to  mobilize  this  army  in  order  to 
quell  the  revolt.  The  supplies  for  the  army  must  be 
transported.  The  moving  of  these  supplies  is  tanta- 
mount to  the  moving  of  commodities  in  commerce. 
In  order  that  these  supplies  may  be  economically 
moved,  the  government  buys  one  thousand  mules  and 
delivers  them  to  the  army  for  that  specific  purpose. 
That  these  mules  may  be  identified  as  government 
mules,  and  to  provide  against  counterfeiting,  they  are 
branded  upon  one  side  "E  pluribus  unum,"  and  upon 
the  other  "In  God  we  trust."  To  make  this  trans- 
action complete,  the  government  will  by  law  proclaim 
that  these  mules,  and  these  mules  only,  shall  perform 
that  function : — making  them  a  sort  of  a  medium  of 
exchange  and  legal  tender  as  it  were.  The  officers  of 
the  army,  by  virtue  of  their  position  like  unto  the 
money-lenders  by  virtue  of  their  acquired  position, 
have  charge  of  the  mules, — are  the  masters  of  the  herd 
(hoard).  By  an  absurd  custom,  the  origin  of  which 
seems  veiled  in  mystery,  it  is  permissible,  yes,  sanc- 
tioned by  solemn  law,  for  these  officers  to  turn  the 
mules  into  a  profit-producing  commodity  for  their  own 
private  gain.  They  see  no  necessity  for  using  the 
mules  freely  for  the  moving  of  supplies  unless  they 
have  their  interest  protected. 

Some  Captain  of  Industry  is  building  a  railroad 
out  West,  and  sees  his  way  clear  to  borrow  the  mules 


The  Fallacy  of  Interest  63 

and  pay  for  their  use,  as  he  knows  that  he  can  pass 
the  burden  along  to  his  patrons  in  due  time.  The 
officers  of  the  army  perceive  the  beauty  of  this  ar- 
rangement, and  they  promptly  proceed  to  loan  the 
mules  to  the  said  Captain  at  an  agreed  percentage. 
Thus  far  this  plan  has  been  productive  of  exceeding 
pleasure.  The  Westerners  will  get  their  railroad,  the 
Captain  of  Industry  will  be  in  a  position  to  make  them 
"pay  the  freight,"  the  officers  will  get  their  principal 
and  interest,  and  will  be  correspondingly  rejoiced. 
The  government  stands  by  with  benign  approval,  ready 
itself  at  any  and  all  times  to  borrow  these  same  mules. 
The  people,  the  army,  are  supposed  to  look  on,  mys- 
tified by  these  masterful  transactions  in  high  finance, 
and  give  ithanks  to  these  gentry,  the  officers,  the  money- 
lenders, for  their  gracious  condescension  in  permit- 
ting these  manifold  blessings  to  fall  alike  upon  the 
just  and  the  unjust.  The  whole  transaction  is  to 
them  "as  deep  and  dark  as  can  be  woven  of  the  warp 
and  woof  of  my.stery  and  death."  The  only  tangible 
fact  which  the  people  as  a  whole  can  grasp  is,  that  they 
are  still  confronted  with  the  task  of  moving  those 
supplies,  and  that  they  have  no  mules  to  do  it  with. 
There  is  no  alternative.  If  they  should  elect  to  trans- 
port the  supplies  on  their  backs  and  toil  along  the 
hot  and  dusty  roads  till  they  reached  their  goal,  i.  e., 
carry  on  commerce  in  the  primitive  way.  they  are  met 
by  the  fiat  of  the  law,  which  asseverates  that  these 
mules,  and  these  mules  only,  are  the  medium  of  ex- 
changee. They  are,  therefore,  compelled  to  apply  to 
the  officers  for  assistance  in  the  matter.     This  assis- 


64  The  True  Fnnclion  of  Money 

tance,  if  granted  at  all,  is  upon  the  officers'  own  terms, 
and  as  long  as  selfishness  and  avarice  dominate  the 
business  world,  those  terms  will  be  the  limit  of  what 
the  traffic  will  bear. 

That  the  commerce  of  civilized  life  must  be  car- 
rie'd  forward,  just  as  the  supplies  of  the  army,  is  patent. 
To  be  carried  forward  in  a  primitive  way  is  impossi- 
ble in  each  instance.  Means  of  economically  accom- 
plishing these  ends  must  be  devised.  This  has  been 
done,  in  one  instance  by  mules,  and  in  the  other  by 
money.  That  these  mediums  are  to  be  used  freely 
for  the  purposes  for  which  they  were  created  seems 
beyond  doubt.  Yet  what  a  difference  results!  If  the 
officers  of  the  army  w^ere  to  appropriate  the  mules  to 
their  own  use,  an  investigation  would  be  next  in  order. 
Upon  conviction,  dismissal  from  the  service  as  being 
unfit  to  wear  the  uniform,  with  disgrace  and  imprison- 
ment, would  rapidly  follow.  Should  money-hoarders 
appropriate  the  money  to  their  own  use,  congratula- 
tions are  in  order ;  and  when  one  has  hoarded  enough 
so  that  he  may  be  classed  as  one  of  our  great  financiers, 
we  advance  him  in  the  service  as  one  worthy  of  our 
confidence  and  esteem. 

Money,  shorn  of  its  halo,  and  left  to  bear  its  own 
just  losses,  would  soon  be  removed  as  a  disturbing 
element  in  the  aft'airs  of  men,  and  commodities  would 
adjust  themselves,  with  a  fair  profit  to  all.  Men  do 
not  enjoy  equal  ability  nor  opportunity  to  acquire 
profits  in  the  commercial  world.  Each,  however,  is 
entitled  to  the  full  benefit  of  his  talents  and  opportuni- 
ties.    The  fruits  of  his  industry  are  his,  to  enjoy  in 


The  Fallacy  of  Interest  65 

any  manner  he  sees  fit.  It  is  the  knowledge  that  in- 
dividual effort  will  be  rewarded  that  animates  in- 
dustry. Each  individual  must  assume  responsibility 
for  his  own  welfare.  He  cannot  depend  upon  others. 
In  the  conduct  of  our  affairs,  in  the  present  day,  these 
truths  are  ostensibly  recognized,  and  are  theoretically 
permitted  to  govern ;  but,  when  submitted  to  a  prac- 
tical demonstration,  they  are  ignored. 

If  human  activities  were  confined  to  a  contest 
between  man  anil  man,  each  would  enjoy  all  he  could 
produce ;  but  under  the  present  system  the  stronger 
sends  his  money  forth  to  renew  the  struggle  with  the 
weaker,  and  thus  succeeds  in  taking  away  "that  which 
he  hath." 


CHAPTER  VII 
CONDITION  OF  LABOR 

ALL  tangible  commodities  which  the  subject  to 
exchange  in  commerce  are  created  by  the  appli- 
cation of  labor  to  the  land  and  its  products. 
Money  does  not  and  cannot  labor.  We  are  told  that 
labor-saving  machinery  assists  in  production  and  is 
entitled  to  its  share  of  the  profits.  This  is  undoubt- 
edly true.  We  are  further  told  that  inasmuch  as 
labor-saving  machinery  is  capital  and  can  be  exchanged 
for  money,  then  money  is  capital ;  and  as,  in  this  view, 
they  both  are  capital,  then  money  must  be  labor-saving 
machinery  and  entitled  to  share  in  the  profits.  I 
advise  anyone  who  believes  this  to  take  a  bag  of  money 
and  with  it  plow  his  field,  cut  his  wheat,  or  weave  a 
bolt  of  cloth.  His  mind  will  become  disabused.  There- 
fore, no  man  can  become  entitled  to  the  profits  of 
labor-saving  machinery  till  he  has  fully  and  completely 
severed  his  connection  with  his  money  and  accepted 
the  labor-saving  machinery  in  return.  By  so  doing 
he  will  be  honestly  entitled  to  the  profits  and  honestly 
subjected  to  the  losses.  It  is  begging  the  question  to 
say  that  he  can  loan  money  to  another  for  the  pur- 
pose of  purchasing  labor-saving  machinery,  and  by  so 
doing  become  entitled  to  profit,  unless  he  is  bound  to 
share  in  the  losses  to  a  corresponding  degree.  As 
long  as  the  machinery  is  operating  at  a  profit,  loaned 


Condition  of  Labor  67 

dollars  assume  the  characteristics  of  legitimately  m- 
vested  dollars ;  that  is,  dollars  which  have  been  ex- 
changed for  the  machinery ;  but  as  soon  as  loss  appears 
they  suddenly  lose  this  character  and  become  just  plain 
dollars;  and  yet,  as  such,  they  keep  right  on  earnmg 
profit.  This  is  a  thing  which,  as  we  have  just  seen, 
does  not  lie  within  their  power. 

Labor  is  industriously  hoeing  and  weaving  and 
sending  the  product  to  fill  the  coffers  of  this  system, 
and  wondering  what  is  becoming  of  it.  Ignorant  of 
this,  it  blames  its  employers  and  fails  to  recognize  that 
the  employers  are  standing  in  the  same  position. 

It  is  reasoned  that  when  a  laborer  receives  his 
pay  on  Saturday  night,  the  contents  of  the  envelope 
are  his  to  do  with  as  he  wishes.  We  will  assume  that 
his  employer  borrowed  this  identical  money.  If  bor- 
rowed at  eight  per  cent  per  annum,  it  must,  if  the  in- 
terest is  payable  yearly,  be  returned,  in  twelve  and 
one-half  years,  twofold.  The  employer  cannot  do 
this  unless  he  can  make  sufficient  profit  from  the 
products  of  labor.  It  is  plain  that  the  burden  of  meet- 
ing this  demand  is  passed  along,  to  be  borne  by  the 
consumer.  The  money  in  the  pay  envelope  is  Jiot  the 
property  of  the  laborer.  It  was  only  borrozvcd  from 
the  bank,  and  hence  still  belongs  to  the  bank.  It  can- 
not, in  the  very  nature  of  things,  belong  to  two  indi- 
viduals at  one  and  the  same  time.  It  came  to  the 
laborer  impressed  with  the  same  demands  that  it  had 
while  in  the  hands  of  the  employer ;  that  is,  that  this 
same  money,  or  an  equal  amount,  plus  as  much  again, 
must  be  furnished  by  labor  in  the  above  period  to 
meet  this  dem.and.    This  is  eff'ected  in  the  most  plaus- 


68  The  True  Function  of  Money 

ible  manner.  The  laborers  of  the  world  comprise  the 
great  majority  of  the  ultimate  consumers.  As  an 
ultimate  consumer,  a  laborer  must  give  back  the  prin- 
cipal borrowed  by  his  employer,  plus  the  interest  de- 
manded, for  the  articles  which  he  himself  has  pro- 
duced. His  employer  acts  for  him  as  a  borrowing 
agent  only.  The  interest  on  bonds  and  on  all  bor- 
rowed money  whatsoever  is  not  paid  by  the  borrowers. 
If  the  borrowers  did  not  know  that  this  burden  would 
be  shifted  to  the  people,  they  would  not  be  borrowers. 
They  knqw  that  they  can  use  the  product  of  labor  to 
compel  lat;>or  to  pay  all  demands. 

Some  political  economists  describe  money  as 
stored  labor.  Probably  petrified  labor  would  be  about 
as  lucid.  They  then  reason  themselves  into  the  idea 
that  this  stored  article  is  brought  forward  and  ex- 
changed for  the  fresh  supply  of  today.  One  hundred 
years  ago  a  man  produced  and  marketed  one  bushel 
of  W'heat  for  one  dollar.  The  consumer  paid  the 
dollar,  accepted  and  consumed  the  wheat.  This  is  a 
simple  and  natural  transaction.  The  producer  has 
been  paid  in  full  and  has  the  dollar,  and  the  consumer 
has  the  wheat.  This  transaction,  as  far  as  the  world 
is,  or  should  be,  concerned,  is  closed.  Many  years 
since,  the  producer  and  the  consumer  have  been  gath- 
ered to  their  fathers.  The  wheat  non  est.  What 
possible  connection  could  this  simple  transaction  have 
with  the  world  of  today?  In  those  days,  as  now,  the 
system  made  it  essential  to  do  business  with  hired 
money.  Thus  it  became  necessary  to  contribute  a 
tithe  of  that  dollar  to  the  gentleman  who  financed  the 
transaction.     This  tithe,  of  course,  fell  upon  the  ulti- 


Condition  of  Labor  69 

mate  consumer,  and  was  absorbed  by  the  money- 
lender and  carefully  stored  away  in  his  vault ;  verily, 
ten  cents  worth  of  labor  preserved,  or,  commercially 
speaking;  canned.  This  process  has  been  repeated 
upon  an  ascending  scale,  till  this  money-lender,  or  his 
progeny,  now  have  a  warehouse  full  of  canned  goods. 
The  system  still  makes  it  necessary  to  do  business 
with  hired  money.  Before  labor  of  today  can  be  ex- 
pended, it  is  essential  to  call  upon  this  store  of  petrified 
labor.  This  ossified  article  wall  not  permit  fresh  labor 
to  exist  without  exacting  the  lion's  share  of  the  profits 
of  the  fresh  labor's  production.  This  profit  is,  in  turn, 
hoarded  as  canned  labor,  to  be  used  in  ages  to  come 
for  the  same  purpose.  Labor,  in  all  honesty,  which 
was  performed  ages  ago  cannot  be  crystallized  and 
brought  forward  in  the  shape  of  a  silver  dollar  and 
made  to  labor  again.  The  labor  that  produced  that 
sack  of  wheat  was  paid  in  full  and  has  gone  forever. 
How  absurd  to  conclude  that  any  part  of  it  could  be 
brought  forward  to  the  present  day  and  again  demand 
pay !  Stating  the  proposition  is  its  own  refutation. 
Verily,  fresh  labor,  once  expended,  is  gone  forever ; 
the  canned  article  is  indestructible.  Fresh  labor  is 
perishable  and  must  be  marketed  each  day ;  the  canned 
goods  keep.  The  perishable  article  is  in  the  hands  of 
the  laborer;  the  preserved  article  is  in  the  hands  of 
the  money-lenders.  The  fresh  article  can  be  bought 
and  paid  for ;  the  canned  specimen  can  be  paid  for, 
but  never  bought 

The  erroneous  idea  of  the  function  of  money  is 
what  leads  to  all  the  illogical  reasoning  about  its 
rights.     The  unjust  acts  which  money  commits  are 


70  The   True  Function  of  Money 

directly  traceable  to  the  fact  that  it  has  been  kept  out 
of  its  true  sphere.  Take  it  out  of  the  position  of  being 
a  profit-producing  commodity  and  permit  it  to  be  itself 
— a  law,  a  function — an'd  it  will  never  again  "perform 
such  fantastic  tricks  before  high  Heaven  as  make  the 
angels  weep."  The  present  perverted  use  of  money 
leads  to  but  one  result — the  increasing  wealth  of  the 
few,  and  the  deplorable  poverty  of  the  many.  We 
are  prone  to  conclude  that  this  system  of  loaning 
money  for  profit  is  one  which  does  not  concern  us, 
unless,  perchance,  we  are  one  of  the  actual  borrowers. 
We  feel  that  by  being  saving  and  frugal,  and  living 
strictly  within  our  means,  we  may  escape  the  necessity 
of  becoming  actual  borrowers.  We  thus  imagine  that 
we  are  fortuntae,  and  that  the  system,  be  it  ever  so 
iniquitous,  is  visited  upon  others ;  and  although  they 
have  our  sympathy,  we  can  do  nothing  for  them,  as 
it  is  an  aft'air  peculiarly  their  own.  This  conclusion 
is  the  result  of  a  superficial  understanding  of  the 
question.  Every  dollar  borrowed  in  this  world  is  a 
debt  passed  along  to  the  ultimate  consumer,  and  you 
are  one.  Although  you  may  refuse  to  borrow  money 
'lirectly.  you  have  many  others  borrowing  for  you.  and 
you  will  pay  the  debt  and  all  the  interest  as  long  as 
you  are  a  consumer.  To  escape  it.  you  must  refuse 
to  consume — starve,  go  naked,  use  no  convenience  of 
life  whatsoever ;  and  you  do  not  yet  escape  it.  Your 
governments,  national,  state,  county,  and  city,  are 
industriously  borrowing  for  you  and  pledging  your 
labor  in  payment.  You  must  leave  your  native  land 
and  seek  a  desert  isle.  You  must  renounce  the 
civilized  world  and  all  its  ways  before  you  can  have 


Condition  of  Labor  71 

any  hope  of  escaping  these  burdens  laid  upon  you 
by  others. 

The  question  of  the  unemployed  is  becoming 
serious.  In  the  last  few  years  it  has  been  growing 
more  and  more  clamorous  for  attention.  As  our 
present  privately-owned  banking  system  becomes  more 
perfectly  organized,  and  its  power  centers  in  fewer 
hands,  the  predicament  of  the  unemployed  becomes 
more  acute.  The  two  are  closely  connected, — evi- 
dently a  cause  and  an  effect.  Civilization,  among 
other  things,  consists  of  a  ready  and  easy  method 
of  exchanging  credits.  This  is  accomplished  by 
the  use  of  money,  a  medium  of  exchange.  No  money, 
no  exchange ;  no  exchange,  no  business ;  no  business, 
no  employment ;  no  employment, — and  we  have 
the  problem  of  the  unemployed.  No  one  knows 
better  than  the  bankers  that  the  banking  system 
is  in  complete  command  of  the  industrial  world. 
Without  thought  or  investigation,  people  concede 
this  tremendous  power  as  a  matter  of  right.  There 
are  some,  however,  who  realize  that  the  assumed 
right  to  this  all-controlling  power  is  unfounded.  Like 
the  hitherto  accepted  doctrine  of  the  divine  right 
of  kings,  when  sifted  to  the  bottom  it  is  found  to 
rest  upon  sand. 

The  idea  that  money  is  a  commodity  that  can 
be  owned  and  manipulated,  as  such,  by  private  indi- 
viduals, brings  the  control  thereof  into  the  hands  of 
the  privately-managed  banking  system.  The  banks 
are  thus  using  a  public  function  as  private  property, 
and,  at  will,  harassing  and  destroying  industry  and 
unexpectedly    throwing    people    out    of    employment 


72  The  True  Function  of  Money 

by  periodically  contracting  the  volume  of  money 
in  circulation.  Unemployment  in  an  individual  is 
unnatural,  and  when  general  is  abnormal.  In  the 
very  nature  of  things,  there  can  be  no  periods  of 
unemployment.  Our  daily  demands  are  the  same 
one  day  with  another.  We  eat,  wear  and  use  as 
much  one  day  as  another.  It  requires  an  even  flow  of 
production  to  supply  this  even  flow  of  consumption. 
Were  things  left  to  take  their  natural  course,  pro- 
duction and  consumption  would  maintain  a  uniform 
ratio  and  periods  of  business  depression  would  be 
unknown. 


CHAPTER   VIII 
CONDITION  OF  CAPITAL 

MONEY  is  an  essential  factor  in  the  eco- 
nomical consummation  of  a  complex  ex- 
change. It  is  the  medium  by  which  the 
items  which  constitute  the  world's  wealth  and  credit 
are  economically  exchanged,  one  for  the  other.  It 
has  no  other  legitimate  use.  To  fulfill  this  function, 
an  exchange  contemplates  full  and  complete  mutual 
surrender  of  the  title  in  both  the  money  and  the 
commodity.  Any  exchange  wherein  the  title  to  the 
commodity  is  surrendered,  and  that  of  the  money 
is  not,  is  abortive.  It  is  the  first  link  in  that  chain 
of  unfair  advantage  which  money  enjoys.  One 
who  borrows  money  for  profit  is  one  who  hopes 
to  share  in  this  unfair  advantage.  He  is  alike  culp- 
able with  him  from  whom  he  borrows.  The  bor- 
rower exchanges  dollars  to  which  he  has  no  title 
for  commodities,  and  thereby  acquires  title  to  the 
commodities.  The  one  with  whom  he  exchanges  is 
deceived  in  the  belief  that  he  is  acquiring  title  to  the 
money.  He  is  not.  He  is  only  borrowing  it  and 
must  return  the  principal,  every  dollar,  and  further,  as 
a  consumer,  pay  his  share  of  the  interest  thereon. 
The  principal  must  be  returned, — the  very  same 
dollars  which  were  borrowed.  (Any  argument  that 
they  are  not  the  identical  dollars  is  futile ;  it  is  only 
begging  the  question.)      The   interest   is   to   be   paid 


74  The  True  Function   of  Money 

from  the  products  of  labor,  which  products  must 
first  be  exchanged  for  cash.  As  all  the  cash,  the 
principal  of  this  debt,  must  be  returned  in  order  to 
pay  the  debt,  it  becomes  necessary  to  exchange  the 
products  for  more  borrowed  money  in  order  to 
meet  the  interest  on  borrowed  money.  There  is 
no  end  to  it. 

I  assert,  without  fear  of  successful  contradiction, 
that  it  is  a  physical  impossibility  to  pay  interest 
on  money  according  to  the  terms  of  the  agree- 
ment. Any  borrower  who  thinks  this  can  be 
done  is  deceiving  himself.  His  only  possible  avenue 
of  escape  is  to  borrow  money  to  pay  interest,  and 
that  from  the  same  party  from  whom  he  borrowed 
the  principal.  This  proposition  will  be  astounding 
to  the  uninitiated.  When  anyone  makes  a  loan,  the 
borrower  agrees  to  return  the  same  amount  of  money 
which  he  borrowed,  together  with  interest,  which  is 
also  to  be  paid  in  money.  It  is  evident  that  the 
borrower  must  get  back,  through  the  channels  of 
trade,  the  exact  amount  of  money  which  he  had  dis- 
tributed. In  addition  thereto,  he  must  acquire  suffi- 
cient money  to  pay  the  interest.  Assuming  that  all 
the  money  in  the  world  amounted  to  one  million  dol- 
lars and  was  equally  distributed  among  the  inhabi- 
tants thereof,  and  that  a  coterie  of  gentlemen  had  em- 
braced the  advantages  of  the  loaning  system  and  had 
persisted,  as  they  have  to  the  present  day,  until 
the  system  had  become  a  perfected  machine  and  in 
control  of  all  this  money — we  will  then  observe  the 
following :  The  bankers  and  money-lenders  will  make 
a   loan   of   one   million    dollars,  payable    in    one   year 


Condition   of   Capital  75 

with  interest.  This  identical  million  dollars  must 
at  that  time  be  returned.  \Vhere  can  the  borrower 
get  the  interest?  He  cannot  produce  money,  as  that 
is  a  function  of  the  government.  His  only  recourse 
is  to  apply  to  the  ones  from  whom  he  originally 
borrowed  for  another  loan  with  which  to  pay  the 
interest.  There  is  no  escaping  the  conclusion ;  the 
only  way  to  pay  interest  on  money  is  to  borrow 
more  money  for  that  purpose,  and  that  from  the 
same  persons  to  whom  the  principal  is  owing.  This 
in  turn  increases  the  people's  debts  to  the  billions 
of  today,  and  upon  which  they  are  compelled  to  re- 
borrow the  same  money,  over  and  over  again,  with 
which  to  pay  the  interest  thereon. 

This  interest  system  is  an  endless  chain  of  dis- 
aster with  which  the  people  are  afflicted,  and  no 
ray  of  hope  will  ever  cheer  them  until  sufficient 
of  the  thoughtful  and  fearless  ones  have  led  the 
world  into  the  light  of  understanding  its  true  nature. 
Under  the  present  system  it  is  not  a  question  of 
ability  or  willingness  to  produce  that  circumscribes 
our  temporal  needs.  All  endeavor  along  these  lines 
is  nullified  by  the  fact  that  producers  of  necessary 
commodities  of  life  are  unable  to  exchange  their 
products.  This  is  the  result  of  the  lack  of  that 
essential    medium — money. 

We  now  clearly  perceive  that  the  control  of 
money  is  the  control  of  production,  that  the  control 
of  production  is  the  control  of  business,  and  that 
the  control  of  business  by  a  handful  of  money- 
lenders and  bankers  is  disaster.  The  producing  and 
commercial   world  of  today  is  an  exact   replica  of  a 


76  The  True  Function  of  Money 

steam  plant,  such  a  one  as  now  furnishes  power 
to  carry  on  the  various  industries  of  the  world. 
Let  us  select  a  great  ocean  steamer  as  she  launches 
forth  upon  the  sea  (of  commerce)  to  perform  her 
functions  in  the  world's  activities.  The  safe  trans- 
port of  ship  and  cargo  from  port  to  port,  from  pro- 
ducer to  consumer,  is  the  task  to  be  performed.  Her 
engine  is  the  capital,  and  the  steam  in  the  boilers 
is  the  labor  with  which  this  is  to  be  accomplished. 
These  forces,  standing  separately,  are  powerless. 
In  order  to  get  results,  there  must  be  devised  a 
medium  of  exchange,  a  method  by  which  these  two 
forces  may  be  economically  united.  This  link  is 
easy  of  discernment  and  simple  in  construction. 
A  comparatively  small  pipe  known  as  the  steam 
line  (the  medium  of  exchange)  connects  the  boilers 
with  the  engine ;  and  the  passage  of  the  steam  through 
this  line  is  controlled  by  a  valve  therein  called  a 
throttle  (the  banks).  Thus  the  enormous  energy 
in  the  boilers  and  the  immense  capabilities  of  the 
engine  will  become  efficient,  both  as  to  time  and 
quantity,  at  the  will  of  the  engineer  (the  banker). 
The  engineer  can,  with  the  slightest  effort,  permit 
that  vessel  to  be  propelled  by  thousands  of  horse- 
power, or  with  very  few,  or  shut  off  the  power 
entirely.  This  he  can  do  by  virtue  of  the  fact  that  he 
has  control  of  the  medium  of  exchange.  During  these 
various  changes  the  volume  of  energy  in  the  boilers 
has  not  diminished ;  in  fact,  it  increases  to  a  point 
of  danger,  averted  only  by  a  safety-valve;  the 
capabilities  of  the  engine  remain  intact,  but  their 
eft'icient   co-operation    has   been   rendered    impossible 


Condition  of  Capital  77 

by  the  closing  of  the  steam  line.  In  the  meantime, 
the  vessel  thus  rendered  helpless  drifts  relentlessly 
toward  the  tumultous  seas  of  the  shoals  of  bank- 
ruptcy. The  captain  and  the  owners  of  the  vessel 
are  horror-stricken.  The  impending  disaster  to 
their  enterprise  has  unnerv^ed  them.  They  apply  to 
the  engineer  for  relief.  He  tells  them  that  the 
cause  of  the  condition  of  affairs  is  that  he  has 
become  timid,  as  the  boat  had  been  running  along 
too  smoothly.  He  could  also  ascribe  the  difficulty 
to  the  fact  that  someone  had  been  "meddling  with 
his  business,"  or  "tinkering  with  the  tariff." 

Their  supplications  are  in  vain.  The  engineer 
remains  obdurate.  One  by  one  they  are  devoured  by 
that  tempestuous  sea  of  bankruptcy,  and  no  one 
remains  but  the  engineer  and  his  minions,  who 
have  played  the  heroic  part  of  the  boy  who  "stood  on 
the  burning  deck".  Yet,  unlike  the  boy.  they  knew  that 
they  were  masters  of  the  situation  at  all  times.  They 
are  now  owners  of  the  entire  enterprise.  The  time 
to  act  has  arrived.  The  engineer,  by  a  slight  turn 
of  the  wrist,  opens  the  throttle,  thus  permitting  the 
medium  of  exchange  to  perform  its  function ;  labor 
and  capital  again  unite ;  the  great  vessel  steers  for  the 
open  sea  and  comes  proudly  into  port,  bedecked 
from  topmost  peak  to  waterline  with  flags  fash- 
ioned from  the  front  pages  of  the  daily  press, 
each  bearing  a  legend  proclaiming  the  return  of 
prosperity.  We,  the  people,  go  home,  bolt  our  simple 
dinners,  and  hasten  down  to  the  opera  house  to  hear 
our  congressman  tell  us  about  what  he  did  to  bring 


7S  The   True  Function  of  Money 

these  glorious  events  to  pass,  and  how  fortunate 
we  are  to  have  in  our  midst  an  engineer  of  such 
sterhng  and  transcendent  qualities.  This  picture  is 
too  beautiful  to  mar.  Let  us  not  sully  our  memory 
by  any  reference  to  the  host  of  black  and  bloated 
remains  that  are,  at  this  instant,  being  ruthlessly 
tossed  about  out  there  on  those  boisterous  shoals 
of  bankruptcy,  the  innocent  victims  of  the  engineer's 
groundless  timidity  or  lack  of  confidence.  Let  us 
draw  the  veil.  Until  sufficient  of  the  thinking  people 
of  the  world  see  and  understand  the  incontrovertible 
analogy  which  exists  between  the  open  sea  of  the 
foregoing  illustration  and  the  sea  of  commerce ; 
the  vessel  sailing  the  open  sea  and  a  business  enter- 
prise ;  the  boiler  and  engine  of  the  vessel  and  labor 
and  capital ;  the  steam  line  and  money ;  the  throttle 
and  bank,  and  the  engineer  and  banker — we  will 
continue  to  take  our  text  from  the  daily  press,  our 
modern  gospel,  and  listen  to  the  sermons  of  our 
congressmen,  our  modern  preachers ;  and,  being  thus 
at  peace  with  ourselves  and  our  modern  god  (of 
Mammon),  we  will  promptly  proceed  to  outfit  another 
vessel  and  send  her  forth  in  high  glee,  and  the  best 
of  cheer,  with  the  same  old  engineer  in  command 
of  the  same  old  throttle ;  and,  although  we  can- 
not bring  ourselves  to  believe  it,  we  may  well  expect 
to  have  the  same  old  results. 

As  a  natural  law  the  amount  of  consumption 
sets  the  speed-limit  for  production ;  but  under  our 
present  system  this  condition  does  not  obtain.  There 
is    no    fixed   and    definite    limit.      Business    can    onlv 


Condition   of  Capital  79 

guess  at  the  proper  speed  for  today  by  consulting 
that  of  yesterday.  The  control  of  this  matter  is 
in  the  hands  of  the  bankers,  who  arbitrarily  set  the 
pace  for  the  day — and  that  very  late  in  the  afternoon. 
One  fine  day  the  business  world  starts  on  its  daily 
round.  Everybody  is  in  high  glee  and  their  cars 
go  humming  along.  They  have  consulted  the  speed 
laws  of  yesterday  and  hope  they  will  remain  the 
same  today.  They  are  doomed  to  disappointment. 
The  bankers,  observing  that  it  will  be  to  their  interest 
to  lower  the  speed  limit,  see,  or  at  least  pretend  to 
see,  imminent  danger  to  all  the  good  people  out 
there  traveling  at  that  breakneck  speed  of  the  yes- 
terdays, and  they  solemnly  and  prayerfully  lower 
the  speed-limit  almost  to  the  vanishing  point  (call 
in  all  outstanding  loans  and  refuse  to  make  any 
more).  The  business  men  are  in  trouble.  Not 
knowing  what  the  speed-limit  was  to  be,  they  had  ex- 
ceeded it  and  thus  broken  the  law.  They  are  placed 
under  arrest,  their  cars  are  confiscated,  and  they  are 
miles  from  home  and  broke, — a  sorry  plight.  The 
question  of  the  unemployed  is  now  present.  As  the 
business  men  near  home  they  find  the  bankers  ready 
to  welcome  them.  These  oracles  of  economics  dilate 
on  the  unfortunate  circumstance,  blame  the  reckless 
disregard  of  the  law,  and  assure  the  man  of  business 
that  the  awful  bogey  of  over-production,  or  some- 
thing just  as  hideous,  is  to  blame  for  it  all.  An 
august  committee  is  appointed  and  those  bogeys  are 
due  for  another  investigation.  The  notion  that  money 
is    capital    is    false ;    and    the    notion    that    it    is    an 


80  The   True  Function  of  Money 

especially    favored    type    of     capital    which     knows 
no  law  of  loss  is  unfounded  in  the  law  of  nature. 

The  phenomena  of  the  rich  growing  richer, 
and  the  poor  growing  poorer,  and  of  panics,  industrial 
depression,  enforced  idleness  and  hard  times,  we 
have  thus  approached  from  the  side  of  cause  and 
traced  to  effect,  and  have  then  retraced  our  steps 
from  effect  back  to  cause.  The  way  is  cleared  of  all 
obstruction.  The  chain  of  evidence  is  complete.  The 
cause  of  the  bubonic  plague  of  industry  is  as  minute 
and  unsuspected  as  was  that  innocent-appearing 
flea  on  that  equally  as  innocent-appearing  rat,  and 
yet  what  potential  engines  of  destruction  they  are! 
The  error  of  conceding  money  to  be  a  commodity 
subject  to  private  ownership  and  control,  and  grant- 
ing to  it  all  the  rights  and  emoluments  of  capital, 
is  the  bubonic  flea  of  industry  and  commerce.  Capital 
is  existing  in  an  atmosphere  of  continual  apprehension 
and  fear.  It  has  no  way  of  warding  off  disaster, 
as  the  cause  thereof  is  at  the  will  and  caprice  of 
those  who  control  its  ability  to  function — those 
who  control  the  money. 


CHAPTER  IX 
WEALTH   AND   CAPITAL 

THE  GREAT  and  as  yet  unsolved  problem  of  the 
world  is,  what  is  the  cause  of  the  wealth  of  the 
few  and  the  poverty  of  the  many?  Why  does  this 
phenomenon  become  more  and  more  manifest  as 
communities  and  nations  advance  and  wealth  and 
population  increase?  The  older  and  more  wealthy 
any  community  becomes,  the  sharper  the  line  is 
drawn,  till,  in  the  centers  of  wealth  and  population, 
we  find  the  few  wealthy  beyond  dreams  and  the 
many  existing  in  abject  poverty.  Everywhere  one 
goes  he  sees  this  condition  in  a  greater  or  lesser 
degree,  being  less  manifest  in  sparsely-settled  com- 
munities, and  increasing  in  rigor  as  wealth  is 
produced  and  population  increases.  We  have  here 
a  very  evident  effect,  and  hence  there  must  be  a  cause. 
To  discover  this  and  remove  it  is  the  duty  which  self- 
preservation  imposes  upon  mankind,  for  it  is  an 
effect  which  unless  prevented  will  engulf  the  world 
sooner  or  later.  Where  the  wealth-producing  power 
is  the  greatest  there  also  will  be  found  the  greatest 
poverty  of  the  masses,  and  the  all-pervading  cry  of 
hard  times  is  heard  in  the  most  despairing  wail. 
Some  scientists  are  content  to  ascribe  this  condition 
to  over-production.  The  fallacy  of  this  is  evident. 
Were  it  true,  this  very  over-production  would  refute 
the  plea  of  hard  times,   for  who  could  complain   if 


82  The  True  Function  of  Money 

they  had  more  than  they  could  use?  A  great  many 
other  reasons  are  proffered  which  are  on  a  par 
with  the  over-production  theory.  That  labor  and 
industry  are  not  getting  their  share  of  wealth  is 
evident ;  that  all  the  surplus  above  a  bare  existence 
is  being  absorbed  in  other  quarters  there  is  no  doubt, 
for  we  have  daily  manifestations  of  this  same  sur- 
plus, and  this  not  by  the  laboring  classes. 

This  legerdemain,  this  acquiring  of  the  surplus 
of  wealth  produced  by  labor,  has  mystified  the 
scientists,  has  led  them  along  vastly  different  lines 
of  investigation,  and  caused  them  to  arrive  at  a 
multitude  of  different  conclusions.  To  find  the 
underlying  cause  of  poverty,  we  need  not  look  to 
the  producers  of  wealth.  We  have  seen  that  pro- 
ducers, apart  by  themselves,  will  apply  their  labor 
to  the  soil  and  the  products  thereof,  and  all  live  in 
peace  and  plenty.  It  is  not  till  their  intercourse  be- 
comes complex  that  the  few  begin  to  mount,  and  the 
many  begin  to  descend  the  ladder  of  want.  At  this 
juncture,  then,  we  are  to  find  the  mysterious  force 
which  causes  this  phenonenon.  Here  we  are  to  find  a 
new  element  injected  into  commercial  transactions. 
As  the  wealth  increases,  and  the  complexities  of 
commerce  become  greater,  we  shall  see  that  this 
element  is  more  and  more  in  profusion,  spreading  its 
virus  and  opening  the  breach,  till  we  reach  the 
centers  of  commercial  complexity,  where  the  phe- 
nomenon has  produced  its  greatest  demonstration ; 
and  we  find,  as  a  result,  enormous  wealth  and  des- 
pairing poverty,  one  upon  the  upper  and  the  other 
upon  the  lower  of  those  two  roads  which  parted  at 


Wealth  and  Capital  83 

the  first  point  of  a  complex  exchange  of  commodities. 
As  the  only  new  element  injected  at  the  point  of 
complex  exchange  is  money,  this  in  some  way  must 
be  connected  with  the  force  which  works  such  dis- 
aster to  the  producer  of  wealth. 

Yet.  we  have  seen  that  money  is  an  essential 
factor  in  the  economical  consummation  of  a  complex 
exchange.  Hence  it  cannot  be  that  the  harm  lies  in 
the  use  of  money  in  that  capacity ;  it  must  be  in  the 
use  of  money  in  some  other  capacity,  amounting  to 
an  abuse,  which  causes  this  wide-spread  distress  so 
evident.  Taking  the  cue  that  this  distress  springs 
from  an  abuse  of  money,  we  must,  in  order  to  dis- 
cover this  abuse,  ascertain  and  define  the  boundaries 
of  the  legitimate  sphere  wherein  money  can  act. 
It  is  only  by  this  knowledge  that  we  can  apprehend 
its  perverted  use.  For  a  correct  understanding  of 
the  true  province  of  money,  it  will  be  necessary 
for  us  to  understand  the  meaning  of  the  terms 
"wealth",  and  "capital".  I  will  not  enter  upon  an 
extended  discussion  of  the  definitions  of  these  terms, 
as  this  is  not  necessary,  but  will  be  content  with  the 
accepted  principles  as  laid  down  by  the  masters : 

"The  real  wealth,  the  annual  produce  of  the 
land  and  labor  of  the  society."  Wealth  of  Nations, 
\'ol.  I.  p.  4;  by  Adam  Smith. 

"Wealth  consists  of  objects  of  value  only." 
Science  of  Wealth,  book  I,  p.  8;  by  Professor 
Amasa  Walker. 

"\Vealth  might  therefore  be  defined  as  com- 
posed of  things  that  possess  value."  Principles  of 
Economics,   chapter   I,   sec.   4;   by    Seligman. 


84  The  True  Function  of  Money 

"Wealth,  as  alone  the  term  can  be  used  in  politi- 
cal economy,  consists  of  natural  products  that  have 
been  secured,  moved,  combined,  separated,  or  in 
other  ways  modified  by  human  exertion,  so  as  to  fit 
them  for  the  gratification  of  human  desires."  Pro- 
gress and  Poverty,  book  I,  p.  40;  by  Henry  George. 

These  definitions  clearly  convey  the  idea  that 
any  item  defined  as  a  factor  of  wealth  is  so  included 
because  of  the  value  created  therein  by  virtue  of  labor 
expended  thereon,  and,  further,  that  said  item  when 
thus  prepared  must  contain  the  capabilities  of  grati- 
fying human  desires.  Money  can  in  no  way  conform 
to  these  requirements. 

The  various  definitions  of  capital  are  as  follows : 

"That  part  of  (a  man's  stock)  which,  he  expects, 
is  to  afiford  him  this  revenue,  is  called  his  capital." 
Wealth  of  Nations,  book  II,  chapter  I ;  by  Adam 
Smith. 

"Capital  is  that  part  of  the  wealth  of  a  country 
which  is  employed  in  production,  and  consists  of 
food,  clothing,  tools,  raw  materials,  machinery,  etc., 
necessary  to  give  eflfect  to  labor."  Principles  of 
Political  Economy,  chapter  V ;  by  Ricardo. 

"The  capital  of  a  nation  really  comprises  all 
those  portions  of  the  produce  of  industry  existing 
in  it  that  may  be  directly  employed  either  to  support 
human  existence  or  to  facilitate  production."  Notes 
on  Wealth  of  Nations,  book  II,  chapter  I ;  by  Mc- 
Cullough. 

"Whatever  things  are  destined  to  supply  pro- 
ductive labor  with  the  shelter,  protection,  tools  and 
materials    which    the    work    requires,    and    to    feed 


Wealth  and  Capital  85 

and  otherwise  maintain  the  labor  during  the  process, 
are  capital."  Principles  of  Political  Economy,  book 
I,  chapter  IV;  by  John  Stuart  Mill. 

"The  word  capital  is  used  in  two  senses.  In 
relation  to  product,  it  means  any  substance  on  which 
industry  is  to  be  exerted.  In  relation  to  industry,  the 
material  on  which  industry  is  about  to  confer  value, 
that  on  which  it  has  conferred  value ;  the  instruments 
which  are  used  for  the  conferring  of  value,  as  well 
as  the  means  of  sustenance  by  which  the  being 
is  supported  while  he  is  engaged  in  performing 
the  operation."  Elements  of  Political  Economy, 
book  I,  chap.  I ;  by  Professor  Wayland. 

"The  common  sense  of  the  term  is  that  of 
wealth  devoted  to  procuring  more  wealth."  Progress 
and  Poverty,  book  I,  chapter  II ;  by  Henry  George. 

It  appears  from  these  definitions  that  capital 
must,  as  an  essential  fact,  be  a  part  of  wealth.  As 
Henry  George,  in  his  Progress  and  Poverty  (book  I, 
chapter  II)  so  aptly  expresses  it:  "Now,  as  capital 
is  wealth  devoted  to  a  certain  purpose,  nothing  can 
be  capital  which  does  not  fall  within  this  definition 
of  wealth",  and  further,  on  the  same  page,  "But 
though  all  capital  is  wealth,  all  wealth  is  not  capital. 
Capital  is  only  a  part  of  wealth — that  part,  namely, 
which  is  devoted  to  the  aid  of  production." 

It  is  evident  that  money,  to  be  capital,  must  also 
be  wealth.  That  it  is  neither,  we  have  but  to  consult 
the  following  authorities : 

"Money  is  no  more  synonomous  with  capital 
than  it  is  with  wealth.  Money  cannot  in  itself  per- 
form any  part  of  the  office  of  capital,  since  it  can 


86  The  True  Function  of  Money 

afford  no  assistance  to  production."  Principles  of 
Political  Economy,  book  I,  chapter  IV,  section  I ; 
by  John  Stuart  Mill. 

"Wealth  is  not  money.  Wealth  is  money's 
worth,  but  wealth  and  money  are  by  no  means 
identical."  Principles  of  Economics,  chapter  I,  sec- 
tion 7 ;  by  Seligman. 

"That  this  universal  truth  is  so  often  obscured, 
is  largely  due  to  that  fruitful  source  of  economic 
obscurities,  the  confounding  of  wealth  with  money." 
Progress  an^d  poverty,  chapter  III,  page  60;  by 
Henry  George. 

"Capital  must  not  be  identified  with  money,  al- 
though it  is  expressed  in  terms  of  money."  Princi- 
ples of  Economics,  page   115;  by  Fetter. 

"First  of  all,  we  must  not  make  the  mistake  of 
confusing  money  with  wealth.  We  have  seen  that 
wealth  is  different  from  and  bigger  than  money. 
Yet  it  is  astonishing  how  easy  it  is  to  forget  this 
simple  fact."  Why  the  Dollar  is  Shrinking,  chapter 
II,  page  15;  by  Irving  Fisher. 

The  statements  of  the  distinguished  authorities 
just  cited  are  clear  and  concise.  There  can  be  no 
misunderstanding  of  their  words,  nor  doubt  as  to  the 
meaning  they  convey.  Other  authorities  could  be 
cited  to  the  same  point.  You  will  hardly  believe  me 
when  I  tell  you  that,  notwithstanding  the  great 
fact  thus  so  clearly  enunciated,  all  the  above  authors 
in  their  learned  works  on  this  interesting  subject 
invariably  treat  of  money  as  being  included  in  both. 
wealth  and  capital.  I  cannot  account  for  this  ex- 
cept upon  the  hypothesis,  that,  the  true   function  of 


Wealth  and  Capital  87 

money  having  escaped  them  and  not  knowing  its 
correct  status,  they  had  no  alternative.  Had 
they  realized  that  that  entity  known  as  money  was  a 
creature  of  law.  and  that  the  free  and  untrammele'd 
circulation  of  that  entity  was  the  proper  functioning 
of  that  law,  they  would  not  have  permitted  themselves 
to  be  so  inconsistent.  They  would  have  then  under- 
stood the  reason  why  money  can  never  be  either 
wealth  or  capital.  The  great  truth  that  money  is 
not  capital  is  rapidly  gaining  ground,  and  it  will 
impress  itself  more  and  more  as  the  world  recognizes 
the  colossal  wrongs  which  money  has  committed, 
and  still  commits,  in  the  name  of  capital. 

"Increase  in  the  amount  of  bonds,  mortgages, 
notes,  or  bank  bills  cannot  increase  the  wealth  of 
the  community  that  includes  as  well  those  who 
promise  to  pay  as  those  who  are  entitled  to  receive. 
The  enslavement  of  a  part  of  their  number  would 
not  increase  the  wealth  of  a  people,  for  what  the 
enslavers  gain  the  enslaved  would  lose.  Increase 
in  land  values  does  not  represent  increase  in  the 
common  wealth,  for  what  land  owners  gain  by 
higher  prices,  the  tenants  or  purchasers,  who  must 
pay  them,  will  lose.  And  all  this  relative  wealth, 
which,  in  common  thought  and  speech,  in  legislation 
and  law.  is  undistinguished  from  actual  wealth, 
could,  without  the  destruction  or  consumption  of 
anything  more  than  a  few  drops  of  ink  and  a  piece 
of  paper,  be  utterly  annihilated.  By  enactment  of 
the  sovereign  political  power,  debts  might  be  can- 
celled, slaves  emancipated,  and  land  resumed  as  the 
common  property  of   the   whole  people,   w^ithout   the 


88  The  True  Function  of  Money 

aggregate  wealth  being  diminished  by  the  vakie  of  a 
pinch  of  snuff ;  for  what  some  would  lose  others 
would  gain.  There  would  be  no  more  desitruction 
of  wealth  than  there  was  creation  of  wealth  when 
Elizabeth  Tudor  enriched  her  favorite  courtiers  by 
the  grant  of  monopolies,  or  when  Boris  Godoonof 
made  Russian  peasants  merchantable  property." 
Progress  and  Poverty,  book  I,  chapter  II ;  by  Henry 
George. 

Mr.  George  here  expounds  a  great  principle. 
Every  word  of  the  foregoing  reasoning  is  true.  The 
only  criticism  which  can  be  offered  is  that  he  failed 
to  apply  this  great  principal  to  money.  He  specifi- 
cally excepts  bonds,  mortgages,  notes,  and  bank  bills 
from  the  category  of  wealth,  on  the  ground  that  they 
"include  as  well  those  who  promise  to  pay  as  those 
who  are  entitled  to  receive."  The  wealth  of  the 
world  would  not  increase,  "for  what  some  would 
lose  others  would  gain." 

For  the  purpose  of  drawing  a  comparison  let 
us  select  notes  from  the  list  of  items  excepted  from 
wealth  by  Mr.  George.  The  reason  why  notes  are 
excepted  is  clearly  that  they  are  but  evidence  of  the 
fact  that  the  holder  thereof  has  parted  with  the 
amount  of  money  stipulated  in  the  note.  For  the 
purpose  of  this  comparison  we  will  assume  that  the 
money  is  wealth.  Now,  so  much  wealth  has  changed 
hands ;  the  lender  has  parted  with  it  temporarily, 
while  the  borrower  has  acquired  it  in  the  same  way. 
The  note  given  is  mere  evidence  of  the  transaction ; 
it  is  not  wealth  itself,  but  can  be  exchanged  for 
wealth.     The   holder  of   the  note   can   negotiate   the 


Wealth  and  Capital  89 

same  for  its  face  value,  and  by  so  doing  be  in  the 
same  position  that  he  was  when  he  started.  In  this 
particular  case,  then,  the  note  has  performed  all 
the  functions  of  a  medium  of  exchange.  All  that 
the  note  would  need  is  a  legal  enactment  making  it 
a  medium  of  exchange  and  legal  tender,  upon  which 
it  would  have  all  the  qualifications  of  money.  A 
law  like  this  would  add  no  wealth  to  the  present 
stock.  There  has  been  no  labor  performed  on  the 
note  with  the  vieiv  of  gratifying  a  human  desire. 
Even  in  these  circumstances,  i.  e.,  being  a  medium  of 
exchange  and  legal  tender,  the  note  would  not  be 
wealth,  and,  consequently,  could  never  be  capital. 
Money,  our  present  medium  of  exchanges  and  legal 
tender,  is  no  more  and  no  less  than  a  note — mere 
evidence  of  the  fact  that  the  owner  thereof  has  a 
credit  in  the  stock  of  the  world's  wealth  which  he 
may  withdraw  at  any  time  upon  surrendering  his 
credit-slip,  his  money.  Should  he  do  this,  there  has 
been  no  more  wealth  created  than  when  the  note 
was  given.  The  real  wealth,  food  and  clothing  for 
instance,  has  but  changed  hands.  The  seller  has  the 
money — the  note — and  in  order  to  be  placed  in  the 
same  position  that  he  was  on  the  start,  he  must 
negotiate  the  money — buy  other  food  and  clothing. 

In  short,  money  is  not  wealth.  It  is  mere  evi- 
dence of  credit  in  the  world's  stock  of  wealth;  and 
under  a  sane  and  honest  law  this  evidence  must  be 
fully  surrendered  before  the  holder  can  withdraw 
his  deposit.  As  money  is  not  wealth,  then  it  can 
never  be  capital.  Not  being  capital,  it  is  an  usurper 
in  the  field  of  profit-producing. 


90  The   True  Function  of  Money 

If  we  could  imagine  the  real  wealth  of  the 
world  (a  quantity  hard  to  define,  but  which  every  one 
knows  to  be  those  things  created  by  labor  in  order 
to  gratify  human  desires)  piled  on  one  side,  and  the 
money  of  the  world  on  the  other,  we  can  clearly 
see  that  the  destruction  of  all  the  money  would  in  no 
way  affect  the  wealth.  Pebbles  could  be  made  a 
medium  of  exchange  and  legal  tender,  and  the  world 
would  be  none  the  loser.  We  have,  then,  discovered 
that  abuse  of  money  which  first  becomes  manifest 
when  money  is  called  into  use  as  an  essential 
factor  in  the  economical  consummation  of  a  complex 
exchange,  to-vvit :  it  is  allowed  to  simulate  capital 
and  thereby  earn  ]:>rofit  under  the  name  of  interest, 
when  in  truth  and  in  fact  it  is  not  capital,  for  it 
specifically  provides  that  it  will  bear  no  loss  occa- 
sioned in  any  venture.  As  the  exchange  of  com- 
modities becomes  wider  and  more  complex,  the 
greater  is  the  abuse  of  money ;  the  results  of  this 
abuse  become  more  and  more  manifest,  till  the  cen- 
ters of  population  and  the  complexities  in  exchange 
are  reached.  Here  we  are  confronted  with  con- 
ditions which  have  perplexed  philosophers  from  time 
immemorial — the  great  wealth  of  the  few  and  ex- 
treme poverty  of  the  many ;  and  this  in  our  own  time  in 
the  midst  of  plenty,  and  when  the  powers  of  pro- 
duction Avere  never  greater. 

A  great  many  theories  as  to  the  cause  of  this 
condition  have  been  advanced ;  but  I  am  constrained  to 
believe  that  the  abuse  of  money,  by  thus  permitting  it 
to  usurp  the  function  of  capital,  is  the  most  virulent 
and  active  poison,  and   is  by   far  the  greatest   cause 


IVealth  and  Capital  91 

of  the  diseased  condition  of  the  industrial  world. 
It  is  the  money-lenders — those  fortified  against  loss 
and  assured  of  gain — who  take  the  upper  road ; 
and  the  laborers — those  fortified  against  profit  and 
assured  of  loss — who  take  the  lower  road.  There 
can  be  no  doubt  about  this,  for  at  the  ends  of  the  two 
roads  will  be  found  these  two  classes — the  banker 
in  his  palace  and  the  laborer  in  his  hovel. 

We  have  seen  that  wealth  is  composed  of  arti- 
cles created  by  labor  to  satisfy  the  desires  of  human- 
ity. Labor  expended  upon  an  article  which  does  not 
do  this  is  labor  lost,  and  that  article  is  no  part 
of  wealth.  Thus  labor  may  be  expended  in  carry- 
ing a  load  of  rocks  from  one  city  to  another  and 
back  again ;  this  process  adds  nothing  to  the  world's 
w^ealth ;  although  the  labor  has  been  expended,  it 
is  useless,  and  the  product  thereof  cannot  become 
wealth,  and  hence  can  never  be  capital.  Yet,  by  an 
enactment  of  the  sovereign  power,  these  rocks  may 
be  declared  the  medium  of  exchange  and  legal 
tender,  and  thus  convert  this  useless  labor  into  a 
means  whereby  the  honest  producers  of  wealth 
must  share  the  products  of  their  labor,  and  receive 
nothing  in  return.  The  production  of  gold  and 
silver  is  one  of  those  useless  occupations  which  do 
not  create  wealth.  It  is  not  performed  by  the  miner 
with  a  view  of  adding  to  the  world's  wealth.  If 
his  commodities  were  to  be  left  to  the  standard  of 
all  other  commodities  and  be  subservient  to  a  market 
commensurate  with  a  demand  therefor  in  the  trades 
and  arts,  he  would  be  a  producer  of  wealth ;  but 
he    does    not   do   this ;   the   use   of   his   wares    in    the 


92  The   True  Ftinction  of  Money 

trades  and  arts  is  infinitesimal  when  compared  with 
the  real  object  of  their  production,  to- wit :  to  take 
them  to  the  mint  and  have  them  coined,  not  into 
wealth,  but  into  tokens  of  wealth — credit-slips — which 
he  can  take  to  the  nearest  store  and  there  exchange 
this  assumed   credit   for  true   wealth. 

With  the  exception  of  the  money-lending  indus- 
try, there  is  probably  none  other  so  useless  as  that 
of  mining  for  gold  and  silver, — ^that  Is,  for  any 
purpose  other  than  as  commodities.  To  illustrate  the 
uselessness  of  gold  and  silver  mining  to  the  world 
at  large,  let  us  apply  the  principles  in  a  simpler 
form :  I  am  a  miner  and  I  have  a  secret  cave 
which  contains  a  certain  kind  of  pebble.  I  take 
a  number  of  these  pebbles  and  have  them  declared 
the  medium  of  exchange  and  legal  tender  by  law. 
There  are  a  thousand  men  busily  engaged  in  hoeing 
and  weaving,  and  all  other  industries  which  pro- 
duce wealth.  In  exchanging  their  commodities,  their 
transactions  become  complex,  and  in  order  economi- 
cally to  consummate  them,  they  must  have  some 
of  my  pebbles.  To  get  them,  were  they  used  in  their 
legitimate  capacity,  they  must  exchange  with  me 
and  give  me  some  of  their  wealth,  for  that  essential 
factor  in  my  hands.  If  they  part  with  some  of  their 
wealth  and  I  get  it,  then  it  must  be  that  they  have 
less  wealth  and  I  have  more.  I  had  no  wealth.  I 
would  have  nothing  to  eat  nor  wear  if  it  were  not 
that  the  law  compels  my  fellow-men  to  get  my  peb- 
bles and  share  their  wealth  with  me.  My  pebbles  are 
useless  to  them,  except  as  credit-tokens ;  my  pebbles 
do   not   add  to   the   wealth    in   their   hands ;   but,    in 


IVealth  and  Capital  93 

order  economically  to  exchange  the  wealth  they  have 
produced,  the  law  demands  this  course.  When  I  have 
exchanged  all  my  first  instalment  of  pebbles  for 
wealth  and  have  consumed  the  same,  I,  being  a  non- 
producer  of  wealth,  find  myself  in  the  same  position 
I  was  in  at  the  start — nothing  to  eat  and  nothing 
to  wear.  The  pebbles,  however,  are  in  the  channels 
of  trade  performing  their  true  function.  A  parity 
exists  between  the  amount  of  pebbles  in  circulation 
and  the  commodities  in  exchange ;  that  is  to  say,  one 
pebble  has  been  accepted  as  the  token  of  so  much  of 
any  given  commodity,  and  it  is  well  understood  how 
many  pebbles  must  be  added  to  any  certain  transac- 
tion in  order  to  maintain  a  balance.  The  producers 
require  no  more  pebbles  in  their  business.  Left 
to  their  own  inclinations,  they  v.ould  not  give  any 
more  of  their  wealth  for  pebbles.  Having  enough, 
they  desire  no  more. 

But  how  about  me?  I  am  a  non-producer  of 
wealth,  and  still  have  nothing  to  eat  and  nothing 
to  wear.  My  avenue  of  escape  is  open.  Ignoring 
the  fact  that  the  producers  of  wealth  have  no 
desire  for  more  pebbles,  I  repair  to  my  secret  cave 
and  reappear  with  a  second  instalment.  Clearly,  I 
have  not  added  to  the  world's  wealth  by  this  act; 
but,  nevertheless,  I  am  again  in  a  position  to  foist 
this  second  instalment  of  pebbles  upon  the  producers, 
contrary  to  their  desires ;  and  in  so  doing  oblige 
them  again  to  share  their  wealth  with  me.  This 
process  will  continue  so  long  as  my  cave  will  produce 
pebbles. 

Let    us    further    consider    those    thousand    pro- 


94  The  True  Fiiuciioit  of  Money 

ducers  hoeing  and  weaving  and  contributing  to  the 
world's  wealth,  and  me  with  my  first  instalment 
of  pebbles. — the  medium  of  exchange  and  legal  tender 
We  now  advance  to  the  point  where  it  is  necessary 
for  the  producers  to  acquire  some  of  my  pebbles, 
as  they  must  by  law  take  them  in  exchange  for  their 
credits,  and  must  also  meet  their  obligations  with 
legal  tender.  Falsely  conceiving  that  my  pebbles 
are  wealth,  and  hence  can  be  converted  into  capital, 
and  as  capital  become  entitled  to  earn  profit  or 
interest,  I  immediately  detect  the  importance  of 
hoarding  my  capital,  so  that  I  will  always  be  in  con- 
trol thereof.  I  say  to  the  producer,  "I  do  not  wish 
to  exchange  my  certain  profit-producing  capital  for 
your  uncertain  capital.  However,  if  you  will  pledge 
your  capital  that  my  capital  will  be  returned  to  me 
at  a  fixed  time,  with  the  full  earnings  as  capital,  I 
will  loan  you  the  amount  you  ask." 

I  can  thus  participate  in  the  world's  wealth 
and  not  lose  an  iota  of  my  capital.  This  is  even 
better  than  my  former  position,  for  now  my  capital  is 
not  in  the  slightest  danger  of  being  lost  or  even 
lessened.  On  the  contrary,  it  will  surely  acquire 
unto  itself  all  the  world's  wealth ;  for  is  not  this 
wealth  pledged  to  the  fulfillment  of  this  very  end? 
Formerly,  I  was  haunted  with  a  great  unrest  lest 
my  cave  failed ;  but  now  I  am  free  from  that  care 
and  I  see  my  way  clear  to  shift  that  unwelcome 
feeling  to  the  producer.  It  is  this  false  idea,  that 
you  can  "eat  your  cake  and  keep  it  too",  that  leads 
to  such  disastrous  results  as  are  grinding  all  hope 
from  the  existence  of  the  masses. 


CHAPTER  X 
THE  MONEY  QUESTION 

THE  MONEY  question  has  been  a  theme  for 
political  discussion  for  ages,  and  is  still  an 
unsolved  problem.  That  there  is  something 
wrong  with  our  present  system  of  distributing  wealth, 
is  evident.  The  unequal  rewards  to  money  on  the 
one  hand,  and  to  labor  and  capital,  on  the  other,  are 
recognized  at  a  glance.  It  is  evident  that  some  re- 
fractory malady  taints  our  industrial  activities.  It 
breaks  out  at  the  most  unexpected  times  and  for  no 
apparent  reason.  The  first  indication  of  an  attack 
of  the  malady  is  stringency  in  money,  industrial 
depression,  and  general  confusion.  These  symptoms, 
if  not  checked,  rapidly  develop  into  the  more  alarm- 
ing forms  of  panics,  enforced  idleness,  and  bank- 
ruptcy. This  condition  soon  results  in  a  general 
debility    known     as     "hard    times".  The    attacks 

occur  with  noteworthy  regularity.  It  would  seem 
that  they  were  brought  on  and  controlled  by  human 
intelligence.  Another  noteworthy  fact  is.  that  it 
matters  not  what  may  be  the  stage  of  the  malady, 
the  phenomenon  of  the  rich  growing  richer  and 
the  poor  growing  poorer  is  ever  active.  This  is 
hard  to  understand.  The  world  is  full  of  plenty, 
we  have  abundance  of  willing  workers  to  garner  the 
same,  and  we  are  constantly  improving  our  means 
of  production. 


96  The   True  Function   of  Money 

A  great  many  theories  as  to  the  cause  of  this 
trouble  have  been  advanced ;  but,  so  far,  none  of 
them  have  proven  substantial.  They  are  but  vain 
gropings  in  the  dark  for  an  outlet.  Our  present  mone- 
tary system  has  been  under  suspicion ;  but,  owing  to 
failure  in  understanding  the  true  function  of  money,  no 
very  logical  conclusion  has  been  evolved.  The  history  of 
the  various  steps  in  the  evolution  of  money  does 
not  concern  us.  All  the  charges  and  counter- 
charges, which  at  times  have  been  bitterly  acrimoni- 
ous, have  been  fully  and  ably  argued  on  each  side 
before  that  great  jury,  the  people,  with  the  re- 
sultant verdict  that  we  have  now  adopted  the  gold 
standard  and  our  present  banking  system. 

A  fair  and  candid  statement  of  the  result  of 
this  verdict  is,  that  the  same  malady  still  exists,  and 
that  its  cause  is  as  yet  undiscovered  by  the  masses. 
In  the  diagnosis  of  the  case  the  symptoms  were 
misinterpreted;  and  the  remedies  applied  proved 
inadequate.  We  must  re-diagnose  and  discover 
the  cause  of  failure.  The  first  symptoms  of  disorder 
do  not  in  any  way  indicate  a  constitutional  weakness, 
but,  to  the  contrary,  give  unmistakable  evidence 
of  local  disturbance.  Some  particular  organ  be- 
comes deranged,  and,  if  permitted  so  to  continue, 
will  soon  spread  its  poison  to  other  organs,  and 
thus  the  whole  structure  become  diseased.  Further 
proof  that  the  malady  is  local  in  its  incipiency  lies 
in  the  fact  that  it  quickly  responds  to  treatment, 
no  matter  at  what  stage.  Under  this  treatment  the 
entire  system  seems  to  undergo  a  complete  change, 
and,  like  magic,  becomes  what  seems  to  be  a  sound 


The  ^loney  Question  97 

and  healthy  whole.  Still,  for  some  mysterious  rea- 
son, while  thus  enjoying  the  best  of  health,  this 
elusive  organ  will  again  become  deranged  and  will 
continue  to  spread  its  poisonous  virus  with  ever-in- 
creasing malignancy,  luitil  again  checked  by  this 
treatment  (permitting  the  volume  of  money  in  cir- 
culation to  become  normal).  The  spectacle  of  the 
periodic  return  of  this  malady,  and  of  its  yielding 
to  this  mysterious  treatment,  is  familiar  to  all.  It 
is  our  duty  to  discover  the  cause  of  this  disturbance 
and  to  remove  it. 

Money,  as  the  medium  of  exchange,  will  per- 
force assume  a  certain  ratio  to  commodities.  The 
unit  of  money  will  assume  a  certain  relative  position 
to  the  unit  of  any  given  commodity.  Thus,  we  say 
a  bushel  of  wheat  is  worth  a  dollar.  Now,  we  do 
not  mean  that  a  dollar  in  money  is  of  the  same  value 
as  the  bushel  of  wheat ;  that  would  be  absurd, 
for  we  know  that  a  dollar  in  money  is  of  no  value — 
that  is,  of  no  value  over  and  above  its  bullion  value 
when  placed  upon  the  market  as  a  simple  commodity 
and  not  stimulated  by  the  coinage  law.  What  we  do 
mean  is,  that  a  bushel  of  wheat  is  worth  just  the 
same  as  any  other  amount  of  any  other  commodity 
which  we  say  is  worth  one  dollar.  Just  as  we  say 
a  certain  acticle  is  one  yard  long,  or  that  it  weighs 
one  pound,  we  mean  that  it  is  as  long  or  weighs 
as  much  as  any  other  article  of  the  same  length  and 
weight ;  and  the  standard  units  of  weights  and 
measures  designate  to  our  minds  what  these  con- 
forming weights  and  measures  must  be.  It  would  be 
as  logical  to  say  that  a  yard  of  silk  is  worth  a  yard 


98  The  True  Function  of  Money 

measure,  or  that  a  pound  of  diamonds  is  worth  a 
pound  weight.  This  language  would  not  change 
the  fact  that  when  we  say  this,  we  mean  that  the 
silk  is  as  long  as  any  other  piece  of  cloth  that  is 
one  yard  in  length,  and  that  the  diamonds  weigh 
the  same  as  any  other  commodity  which  weighs 
one  pound.  The  standard  units  of  weights  and 
measures  are  used  only  as  a  means  of  comparing 
these  commodities :  a  sort  of  medium  of  exchange 
of  their  comparative  units.  The  true  function  of 
dollars,  in  their  particular  sphere,  is  the  sam.e  as  the 
units  of  weights  and  measures,  being  a  fixed  stand- 
ard for  purposes  of  comparison  only ;  and  none  of 
them  can  by  any  construction  ever  become  the  com- 
modities with  which  they  deal. 

If  the  market  conditions  are  such  that  wheat 
is  rated  as  worth  one  dollar  per  bushel,  oats  worth 
one  dollar  per  bushel,  and  hay  worth  twenty  dollars 
per  ton,  it  means  that  one  bushel  of  wheat  will  make 
an  even  exchange  for  one  bushel  of  oats,  and  that 
it  will  take  twenty  bushels  of  either  to  exchange  for 
a  ton  of  hay.  If  wheat  goes  to  one  and  one-half 
dollars  per  bushel,  it  means  that  it  would  take  one 
and  one-half  bushels  of  oats  to  make  an  even  ex- 
change for  one  bushel  of  wheat.  Money  figures  in  all 
these  transactions  as  an  abstruse  reckoner  of  the 
differing  values  of  commodities.  Having  no  connec- 
tion with  the  real  values  of  commodities,  it  matters 
not,  in  the  first  instance,  what  the  amount  of  money 
upon  which  it  is  based  may  be ;  but  this  relative 
status  between  money  and  commo'dities,  when  once 
established,    is    of    the    utmost    importance    to    pre- 


The  Money  Question  99 

serve ;  and  it  is  equally  important,  and  an  indi- 
spensable requisite,  that  the  amount  of  money  in  cir- 
culation be  maintained  at  that  point,  or  as  near 
thereto  as  possible.  Maintaining  this  fixed  and  stable 
amount  of  money  in  free  circulation  is  as  vital  to 
the  business  interests  as  is  the  normal  flow  of  blood 
in  a  living  body.  If  you  increase  the  flow  beyond 
normal,  it  develops  one  set  of  maladies ;  if  you  de- 
crease the  flow,  others  appear.  The  maintaining  of 
this  equilibrium  is  mandatory.  The  slightest  change 
either  way  produces  like  results.  Thus,  if  the  ratio 
of  the  money  units  to  the  units  of  commodities  be- 
comes fixed  and  settled  upon  the  basis  of  a  certain 
amount  of  money  in  circulation,  and  that  ratio 
should  happen  to  be.  at  any  given  stage  of  the  market, 
that  one  bushel  of  wheat  is  equal  to  one  dollar,  we 
imperceptibly  slip  away  from  the  true  relation, 
as  will  be  hereafter  explained,  and  we  accept  as  a 
fact  that  the  bushel  is  worth  one  dollar,  and,  in- 
versely, that  the  dollar  is  worth  one  bushel.  This 
being  true,  we  can  readily  see  how  an  inflation  or 
a  contraction  of  the  money  in  circulation  will 
afifect  the  matter.  If  an  inflation  to  twice  the  amount 
of  money  in  circulation  occurs,  it  will  result  in  the 
proportion  of  one  bushel  of  wheat  to  two  dollars, 
thereby  lessening  the  purchasing  power  of  the  dollars. 
If  the  money  is  contracted  to  one-half  of  the  former 
amount,  then  the  ratio  will  be  one  bushel  of  wheat 
to  one-half  dollar,  thereby  increasing  the  purchasing- 
power  of  the  dollar.  This  arbitrarily  destroys  the 
stability  of  the  unit  of  the  measure  of  value,  thereby 
invalidating    its    usefulness. 


100  The  True  Function  of  Money 

I  wish  my  reader  to  get  his  mind  firmly  fixed 
upon  this  fact — that  is,  that  the  inflation  or  con- 
traction of  the  currency  in  no  way  affects  the  rela- 
tive status  of  commodities.  Their  relative  propor- 
tions as  to  quantity  and  value  are  always  the  same, 
subject  to  the  fluctuations  caused  by  the  law  of  supply 
and  demand.  Commodities,  as  between  themselves, 
take  no  reckoning  of  the  greater  or  lesser  purchasing 
power  of  the  dollar ; — thus,  as  far  as  commodities  are 
concerned,  if  the  money  is  inflated  to  twice  its 
former  value,  and  the  proportion  then  reads  that 
one  bushel  of  wheat  is  equal  to  two  dollars,  it  also 
means  that  if  oats  were  formerly  worth  one  dollar, 
they  are  now  worth  two  dollars  per  bushel.  As  to 
the  wheat  and  oats,  the  proportion  remains  the  same 
— that  is.  that  one  bushel  of  wheat  is  still  worth  one 
bushel  of  oats.  If  the  currency  is  contracted  to 
one-half  its  former  volume,  and  the  proportion  is 
that  one  bushel  of  wheat  equals  one-half  dollar,  this 
also  means  that  one  bushel  of  oats,  which  was  for- 
merly equal  to  one  dollar,  is  now  equal  to  one-half 
dollar.  We  find  no  change  in  the  proportion  of 
wheat  to  oats;  they  still  equal  each  other. 

Just  as  we  get  to  understand  that  the  owners  of 
the  commodities  of  the  world  are  not  aitected  in 
any  way,  in  their  relative  standing  to  each  other, 
by  a  change  in  the  volume  of  currency,  we  are  con- 
fronted with  this  problem:  If  I  have  ten  thousand 
bushels  of  wheat,  which  have,  by  the  settled  ratio 
of  commodities  to  money,  been  ascertained  to  be  one 
bushel  to  one  dollar,  and  I  sell  at  that  price,  I  have 
simply  exchanged  my  wheat  for  other  commodities — 


The  Money  Question  101 

say,  oats  at  one  dollar  per  bushel,  for  future  de- 
livery. I  accept  an  order  on  the  world's  stock  of  oats 
in  the  form  of  money  which  now  bears  the  ratio 
of  one  'dollar  to  the  bushel.  It  is  evident  that  if  this 
ratio  is  changed  before  I  elect  to  surrender  my 
order  and  take  the  goods,  I  will  be  affected  by  the 
change ;  thus,  if  the  money  is  inflated  so  that  the 
ratio  will  at  that  time  be  one  bushel  of  oats  to  two 
dollars,  I  will  be  able  to  get  but  five  thousand 
bushels.  If,  on  the  other  hand,  the  currency  is 
contracted  and  the  ratio  becomes  one  bushel  of  oats 
to  one-half  dollar,  then  I  will  be  able  to  get  twenty 
thousand  bushels  with  my  money.  All  this  goes  to 
show,  that,  while  a  man's  possessions  are  in  the 
form  of  commodities,  he  is  not  concerned  with  the 
volume  of  money  in  circulation,  as  his  commodities 
will  always  maintain  a  uniformly  relative  value  to  all 
other  commodities.  It  is  not  till  he  exchanges  his 
commodities  for  money  that  the  change  in  the  volume 
thereof  in  circulation  becomes  vital. 

It  is  thus  evident  that  one  who  is  honestly 
using  his  money  in  business  should  be  protected 
in  this  transition  from  wealth  to  the  evidence  thereof. 
The  money  in  circulation  must  be  kept  at  a  stable 
quantity.  Any  sudden  change  therein  disorganizes 
the  whole  system.  The  fact  that  the  law  compels  a 
man  to  do  business  with  the  adopted  medium  of 
exchange,  and  to  accept  from  his  debtors  and  to  give 
to  his  creditors  legal  tender,  in  the  general  course 
of  business,  causes  a  constant  transition  of  com- 
modities to  money  and  of  money  back  to  commodities. 
This    being    true,    no    one    should    be    compelled    to 


102  The  True  Function  of  Money 

suffer  loss,  or  permitted  to  gain  a  profit,  in  these 
transactions  by  any  arbitrary  or  personally  con- 
ducted expansion  or  contraction  of  the  volume  of 
money  in  circulation. 

We  are  now  on  the  gold  standard,  and  for  the 
purpose  of  this  investigation  we  will  admit  that  this 
best  conserves  the  stable  parity  between  money  and 
commodities,  so  important  to  maintain;  and  that  the 
production  of  gold  will  be  sufficient  to  maintain 
that  parity  with  the  increasing  wealth  of  the  world. 
Nothwithstanding  the  fact  that  our  monetary  system 
is  thus  theoretically  perfect,  we  still  have  a  vivid 
conviction  that  something  is  wrong.  The  same  old 
malady  keeps  continually  breaking  out.  Of  the  two 
evils  of  inflation  and  contraction,  the  former  is  by 
far  the  lesser.  It  is  an  error  on  the  side  of  the  weak 
against  the  strong;  it  is  "to  err  on  the  side  of  mercy," 
as  it  were.  The  results  therefrom  do  not,  and  can- 
not, cause  such  wide-spread  misery.  This  impels  us 
to  the  conclusion  that  the  seat  of  this  malady  is  to 
be  found  in  the  realm  of  contraction.  To  become 
convinced  that  it  is  the  periodic  contraction  of  the 
currency  which  causes  our  industrial  troubles,  one 
has  but  to  observe  the  actual  workings  of  the  system. 
I  take  it  as  a  fact  beyond  doubt  that  every  dollar 
of  our  money  is  now  bearing  interest,  many  times 
over,  to  the  banking  system.  By  this  process,  it 
develops  that  whatever  money  there  is  in  circulation 
is  there  by  leave  of  the  money-lenders  and  bankers. 
Business  is  dependent  upon  the  amount  of  money 
thus  permitted  to  circulate. 

This  being  true,    we   will   watch    actual    results. 


The  Money  Question  103 

We  have  noted  that  the  first  symptom  or  indication  of 
the  breaking-out  of  the  malady  is  a  stringency  of 
money.  On  all  sides  we  hear  the  complaint  that 
"money  is  tight."  This  complaint  is  well  founded ; 
money  is  tight  and  scarce.  It  is  being  taken  out  of 
circulation  by  the  controllers  thereof.  This  is  easily 
accomplished ;  upon  the  receipt  of  a  telegram  from 
headquarters  every  bank  throughout  the  country 
joins  with  Wall  Street  in  calling  in  all  outstanding 
obligations  and  refusing  to  make  further  loans.  It 
is  in  the  power  of  the  controllers  of  this  money  to 
decrease  in  one  day  the  amount  in  circulation  to  the 
checking  accounts  and  the  change  in  our  pockets. 
This,  of  course,  does  not  take  into  consideration 
money  in  safe-deposit  vaults,  which  is  not  in  circula- 
tion anyway.  We  would  then  have  a  contraction  of 
the  currency  sufificient  to  put  the  purchasing  power 
of  a  dollar  as  high  as  that  of  a  thousand-dollar 
bill  when  things  are  normal.  This,  however,  would 
bring  certain  disaster ;  so  the  same  idea  is  carried 
out,  but  with  dignified  judgment.  The  currency  is 
periodically  contracted  far  enough  to  milk  or  squeeze 
business  to  the  breaking  point,  when  all  of  a  sudden 
the  pressure  is  relieved,  money  is  turned  loose  via 
the  loaning  route,  and  we  begin  to  feel  the  return 
of  prosperity  throughout  the  land.  It  will  not  avail 
our  money-lending  brethren  to  deny  that  they  do  this. 
Everyone  who  has  had  dealings  with  the  banks  has 
witnessed  this  mysterious  and  ever-recurrent  practice 
of  refusing  loans  and  calling  in  all  outstanding  ob- 
ligations. 

We    the   people,    as    a   whole,    in   our   ignorance 


104  The  True  Function  of  Money 

of  the  true  condition  of  affairs,  look  upon  these  dis- 
turbances as  a  thing  of  course,  much  the  same  as  the 
ancients  considered  all  calamities  to  be  a  visitation 
upon  them,  manifesting  God's  displeasure.  When 
prosperity  returns,  we  think  that  God  has  relented. 
Little  we  know  that  this  prosperity  is  the  placing 
of  loaned  dollars  where  they  will  do  the  most  good 
in  preparing  the  crop  of  milk  and  honey  to  be  har- 
vested on  the  next  milking  and  squeezing  raid. 
This  legalized  injustice  is  the  direct  result  of  per- 
mitting money,  in  the  hands  of  private  individuals, 
to  be  guaranteed  against  loss  and  assured  of  interest. 
This  is  a  most  dangerous  power  acquired  through 
the  erroneous  conception  that  money  is  capital.  In 
everyday  life,  we  look  with  disfavor  upon  the  practice 
of  keeping  two  scales  on  hand — one  for  buying 
and  the  other  for  selling ;  one  inflated  and  the  other 
contracted.  And  yet  the  controllers  of  our  money 
are  operating  upon  the  very  same  principle.  They 
deal  with  the  world's  wealth  with  either  an  inflated 
or  contracted  currency ;  the  one  a  buying  scale,  the 
other  a  selling  scale,  to  be  used  alternately  as  best 
serves  their  purpose.  In  permitting  money  to  become 
centralized  by  the  unfounded  notion  that  it  is  capital, 
and  thus  entitled  to  earn,  we  put  into  the  hands  of 
those  who  hoard  the  money  the  power  to  inflate  or  to 
contract  at  will  the  volume  of  money  in  circulation. 
This  automatically  "bulls"  or  "bears"  the  fruit  of 
our  labor  so  as  to  suit  the  avarice  and  designs  of  the 
controllers  of   the  currency. 

During  the  greenback  and  free-silver  campaigns, 
all    the   facts   and    logic    bearing   upon    the   evils    of 


The  Money  Question  105 

inflation  were  marshalled  and  launched  in  solid 
phalanx  by  the  votaries  of  the  doctrine  of  sound 
money,  with  convincing  and  irresistible  effect.  The 
people  rallied  to  the  banner  of  this  logic  and,  by  their 
votes,  put  an  effectual  quietus  on  that  grim-visaged 
destroyer,  Inflation.  By  so  doing,  the  people  placed 
a  secure  barrier  against  any  hope  of  their  ever 
gaining  any  unjust  profit  from  the  commodities, 
the  products  of  labor,  in  their  hands.  Inflation  is 
unscientific  and  unjust ;  it  works  an  advantage 
to  commodities  and  an  injustice  to  money.  Contrac- 
tion, equally  unscientific  and  unjust,  works  an  ad- 
vantage to  money  and  an  injustice  to  commodities. 
The  people's  interest  lies  naturally  with  commodities; 
the  interests  of  the  banks  and  money-lenders  lie 
wholly  in  the  realm  of  money. 

Following  a  perfectly  sane  and  logical  course, 
the  people,  by  their  votes,  erecte'd  an  effectual  barri- 
cade and  are  therefore  fortified  against  the  dangerous 
inflation  of  the  volume  of  money  in  circulation. 
The  torrents  of  greenbacks  and  free  silver  may  now 
beat  against  this  barricade,  but  their  efforts  will  be 
unavailing.  With  a  sublime  confidence,  the  people 
rest  assured  that  the  money  in  circulation  will  thus 
be  maintained  at  a  constant  and  uniform  level.  They 
trustingly  believe  that  with  such  protection  it  will 
and  must  remain  normal ;  and  that  any  theory  to 
the  contrary  must,  in  the  very  nature  of  things, 
be  baseless.  With  a  consolation  due  from  a  great 
deed  w^ell  done,  the  people  now  apply  themselves 
to  the  task  of  producing  wealth — commodities — and 
bringing   them    into   a   normal   market.      They   learn 


106  The  True  Function  of  Money 

in  time,  however,  that  the  volume  of  money  available 
to  carry  on  business  has  a  most  mysterious  and  dis- 
tressing habit  of  contracting  at  the  very  worst  time 
that  such  a  thing  could  happen.  Evidently,  the  medium 
of  exchange  leaks  off  into  the  banks,  and  is  held 
there.  The  people,  in  their  zeal  to  guard  against  an 
over-supply  of  the  medium  of  exchange,  lost  sight  of 
the  disastrous  consequences  of  subterranean  chan- 
nels leading  into  the  banks.  They  had  not  detected 
the  great  distinction  between  the  volume  of  money  in 
existence  and  the  volume  of  money  in  circulation. 
The  more  the  medium  leaks  off  into  the  banks, 
the  more  precious  it  becomes,  and  the  greater  the 
havoc  wrought  upon  the  producer  and  the  consumer. 
These  periodic  leaks  into  the  banks  so  deplete  the 
volume  of  the  medium  of  exchange,  in  circulation, 
that  the  commodities  become  stranded  upon  the 
shoals  of  bankruptcy.  The  consumer  wants  the 
goods  and  cannot  get  them ;  the  producer  wants  to 
move  the  goods  and  cannot  do  so.  They  both  suffer. 
In  the  meantime  the  banker  and  money-lender 
are  enjoying  a  high  grade  of  prosperity.  What  the 
first  lose  inures  to  the  latter's  gain.  This  is  evident. 
The  same  mathematical  demonstration,  elsewhere 
herein,  which  shows  how  one  hundred  thousand 
dollars,  with  fifteen  per  cent  reserve,  will  permit 
the  use  of  five  hundred  and  sixty-six  thousand, 
six  hundred  and  sixty-six  dollars  and  sixty-six  cents 
of  credit ;  and  on  a  five  per  cent  reserve  will  permit  one 
million  nine  hundred  thousand  dollars  of  credit  to  be 
utilized,  will,  when  inversely  reasoned,  also  demon- 
strate that  one  hundred  thousand  dollars  taken  out  of 


The  Money  Question  107 

circulation  will,  in  the  same  way,  render  the  same 
amount  of  credit,  respectively,  unavailable.  This  stifles 
a  commensurate  amount  of  exchange. 

The  above  statement  is  based  upon  the  amount 
of  credit  made  available  to  tTie  immediate  borrower, 
only,  and  takes  no  note  of  the  millions  of  dollars- 
worth  of  credit  which  the  above  sum  would  make 
available  to  others,  provided  it  could  be  kept  out 
of  the  banks  and  in  constant  circulation.  A  homely 
example  will  illustrate :  A,  B,  C,  D,  E,  F,  and  G,  and 
as  many  more  as  you  may  wish,  have  been  engaged  in 
business  and  have  become  mutually  indebted.  A 
has  been  successful  in  borrowing  ten  dollars  from 
a  bank  and  pays  it  to  B,  he  to  C,  he  to  D,  and  so 
on  'to  G,  who  pays  it  back  to  A.  By  going  no  further 
we  have  balanced  seventy  dollars-worth  of  accounts. 
It  could  go  on  indefiinitely.  Or :  Assume  this 
money  to  be  used  in  its  legitimate  capacity — that  is, 
invested  in  commodities, — and  we  have  the  following 
condition :  A  will  buy  a  commodity  from  B,  and 
he  from  C,  and  so  on ;  there  is  no  limit  to  the 
amount  of  commerce  which  could  thus  be  carried  on. 
Locking  up  the  ten  dollars  and  hoarding  it  will 
make    all    this    potential    business    impossible. 

If  civilization  understands  any  one  fact,  it  is 
that  business  cannot  be  carried  on  without  money. 
No  matter  how  much  money  may  be  in  existence, 
if  it  is  all  withdrawn  from  use  and  locked  up  it 
has  for  that  period  as  money  ceased  to  exist,  and 
industry    is    the    sufferer. 

The  next  task  confronting  the  people  is  the 
proposition  of   stopping  the  leakage   into  the  banks. 


108  The  True  Function  of  Money 

This  is  as  simple  as  was  the  building  of  the  barri- 
cade against  inflation.  They  are  each  done  by  the 
will  of  the  people,  and  evidenced  by  a  few  drops  of 
ink  on  a  statute-book.  We  are  already  secure  against 
inflation ;  we  must  now  secure  ourselves  against 
contraction.  We  experience  no  danger  from  flood; 
but  we  must  by  all  means  stop  the  leaks.  The  same 
facts  and  logic  which  were  so  successfully  urged 
against  inflation  apply  with  equal  force  to  that 
greater  evil  which  results  from  contraction, — of  the 
two  evils,  contraction  is  by  far  the  more  disastrous  to 
commerce ;  and  today  we  have  no  protection  what- 
ever against  it.  This  engine  of  destruction  is  com- 
pletely in  the  hands  of  the  bankers  and  money- 
lenders, and  they  are  answerable  to  no  one.  At  will, 
"upon  the  mellowing  of  occasion"  these  gentlemen 
can,  and  do,  demoralize  business  by  the  simple  act 
of  contracting  the  amount  of  money  in  circulation, 
which  they  do  by  calling  in  loans  as  fast  as  they 
become  due  and  refusing  to  make  new  ones — a  pro- 
ceeding which  causes  the  heart-rending  miseries  of 
poverty  to  stalk,  gaunt-eyed,  through  homes  wdiere 
peace  and  plenty  should  be  the  rewards  of  honest 
labor.  This  condition  places  all  business  upon  the 
insecure  ground  of  human  weakness  swayed  by 
avarice.  At  any  moment,  structures  which  have 
taken  years  of  toil  and  application  to  erect  may 
be  torn  from  their  foundations  and  left  smoldering 
wrecks,  monuments  by  the  wayside,  to  mark  the 
graves  of  martyrs  to  that  erroneous  idea  that  money 
is  capital,  and,  as  such,  has  the  right  to  profit — and, 
more,  to  have  that  profit  guaranteed. 


The  Money  Question  109 

History  periodically  devotes  a  chapter  to  the 
full  verification  of  the  foregoing  facts.  Let  us  read 
an  appropriate  chapter  on  the  English  panic  of  1847 : 

"In  modern  England,  as  in  ancient  Italy,  the 
weakest  sank  first,  and  the  lan\led  gentry  suc- 
cumbed, almost  without  resistance,  to  the  combina- 
tion which  Lombard  Street  made  against  them. 
Yet,  though  the  manufacturers  seemed  to  triumph, 
their  exultation  was  short,  for  the  fate  impended 
over  them,  even  in  the  hour  of  their  victory,  which 
always  overhangs  the  debtor  when  the  currency 
has  been  seized  by  the  creditor  class.  By  the  'Bank 
Act'  the  usurers  became  supreme,  and  in  1846  the 
potato  crop  failed  even  more  completely  than  in 
1845.  Credit  always  is  more  sensitive  in  England 
than  in  France,  because  it  rests  upon  a  narrower 
basis,  and  at  that  moment  it  happened  to  be  strained 
by  excessive  railway  loans.  With  free  trade  in 
corn,  large  imports  of  wheat  were  made,  which  were 
paid  for  with  gold.  A  drain  set  in  upon  the  banks, 
the  reserve  was  depleted,  and  by  October  2,  1847, 
the  directors  denied  all  further  advances.  Within 
three  years  of  the  passage  of  his  statute,  the  event 
Loyd  had  foreseen  arrived.  'Monetary  distress' 
began  to  force  down  prices.  The  decision  of  the 
directors  to  refuse  discounts  created  'a  great  excite- 
ment in  the  stock  exchange.  The  town  and  country 
bankers  hastened  to  sell  their  public  securities,  to 
convert  them  into  money.  The  diflference  between  the 
prices  of  consols  for  ready  money  and  for  the  account 
of  the  14th  of  October  (only  twelve  days  oflF), 
showed     a  rate  of  interest  equivalent  to  50  per  cent 


110  The   True  Function   of  Money 

per  annum.  Exchequer  bills  were  sold  at  35s.  dis- 
count.' *  *  *  'A  complete  cessation  of  private  dis- 
counts followed.  No  one  would  part  with  the  money 
or  notes  in  his  possession.  The  most  exorbitant 
sums  were  offered  to  and  refused  by  merchants  for 
their  acceptances.' 

"Additional  gold  could  only  be  looked  for  from 
abroad,  and  as  a  considerable  time  must  elapse  be- 
fore specie  could  arrive  in  sufficient  quantity  to  give 
relief ;  the  currency  actually  in  use  offered  the  only 
means  of  obtaining  legal  tender  for  the  payment  of 
debts.  Consequently  hoarding  became  general,  and, 
as  the  chancellor  of  the  exchequer  afterward  ob- 
served, *an  amount  of  circulation  which,  under  or- 
dinary circumstances,  would  have  been  adequate, 
became  insufficient  for  the  wants  of  the  community.' 
Boxes  of  gold  and  bank-notes  in  'thousands  and 
tens  of  thousands  of  pounds'  were  'deposited  with 
bankers.'  'The  merchants,'  the  chancellor  said,  begged 
for  notes :  'Let  us  have  notes — we  don't  care  what 
the  rate  of  interest  is.  Only  tell  us  we  can  get 
them,  and  this  will  at  once  restore  confidence.' 

"But,  after  October  2,  no  notes  were  to  be  had, 
money  was  a  commodity  without  price,  and  had 
the  policy  of  the  'Bank  Act'  been  rigorously  main- 
tained, English  debtors,  whose  obligations  then  ma- 
tured, must  have  forfeited  their  property,  since 
credit  had  ceased  to  exist  and  currency  could  not 
be  obtained  wherewith   to   redeem   their  pledges. 

"The  instinct  of  the  usurer  has,  however,  never 
been  to  ruin  suddenly  the  community  in  which  he  has 
lived :  only  by  degrees  does  he  exhaust  human  vital- 


The  Money  Question  111 

ity.  Therefore,  when  the  great  capitalists  had  satis- 
fied their  appetites,  they  gave  relief.  From  the  2d 
to  the  25th  of  October,  contraction  was  allowed  to 
do  its  work ;  then  Overstone  intervened,  the  govern- 
ment was  instructed  to  suspend  the  'act',  and  the 
community  was  promised  all  the  currency  it  might 
require. 

"The  effect  was  instantaneous.  The  letter  from 
the  cabinet,  signed  by  Lord  Russell,  which  recom- 
mended the  directors  of  the  bank  to  increase  their 
discounts,  'was  made  public  about  one  o'clock  on 
Monday,  the  25th,  and  no  sooner  was  it  done  so  than 
the  panic  vanished  like  a  dream !  Mr.  Gurney 
stated  that  it  produced  its  effect  in  ten  minutes ! 
No  sooner  was  it  known  that  notes  might  be  had, 
than  the  want  of  them  ceased !'  Large  parcels  of 
notes  were  'returned  to  the  Bank  of  England  cut 
into  halves,  as  they  had  been  sent  down  into  the 
country.'  The  story  of  this  crisis  demonstrates 
that,  by  1844,  the  money-lenders  had  become  auto- 
cratic in  London     *     *     * 

"There  was  extreme  suffering  throughout  the 
country,  which  manifested  itself  in  all  the  well-known 
ways.  The  revenue  fell  off,  emigration  increased, 
wheat  brought  but  about  five  shillings  the  bushel, 
while  in  England  and  Wales  alone  there  were  upward 
of  nine  hundred  thousand  paupers.  Discontent  took 
the  form  of  Chartism,  and  a  revolution  seemed 
imminent." — Law  of  Civilization  and  Decay,  pages 
342-345, — By  Brooks  Adams. 

From  this  chapter  certain  facts  stand  out  in 
bold  relief : 


112  The  True  Function  of  Money 

1st.  "By  the  'Bank  Act'  the  usurers  became 
supreme." 

2nd.  "A  drain  set  in  upon  the  banks." 
3d.  "The  directors  denied  all  further  advances." 
4th.  "The  decision  of  the  directors  to  refuse 
discounts  created  a  great  excitement  in  the  stock 
exchange.  The  town  and  country  bankers  hastened 
to  sell  their  public  securities,  to  convert  them  into 
money." 

5th.  "A  complete  cessation  of  private  discounts 
followed." 

6th.     "Hoarding  became  general." 
7th.     "The  merchants  begged  for  notes." 
8th.     "There   was  extreme  suffering  throughout 
the  country." 

9th.  "When  the  great  capitalists  had  satisfied 
their  appetites  they  gave  relief." 

10th.     "The  effect   was  instantaneous." 
We  here  have  the  Ten  Commandments  of  all  well- 
devised  panics;  those  of  1873,  1893,  1907,  and  1921 
were   all    brought    on   by   a    rigid    adherence   to    the 
same    formula. 

Gold  and  silver  are  the  best  substances  available 
for  the  standard  of  our  currency.  They  are  suffi- 
ciently stable  and  convenient,  and  exist  in  ample 
quantities  for  all  purposes.  The  periodical  collapse 
of  a  metallic  standard  can  in  no  way  be  attributed 
to  the  circumstance  that  it  is  metallic;  for  these 
conditions  arise  solely  from  the  fact  that  it  becomes 
unavailable  by  reason  of  the  hoarding  of  it  by  those 
who  assert  their  assumed  right  so  to  do. 


The  Money  Question  113 

The  moment  the  amount  of  money  available 
for  circulation  becomes  equal  to,  and  as  equable  as, 
the  amount  in  existence,  there  will  be  no  fear  of 
collapse.  But  as  long  as  the  world  accepts  the 
doctrine  that  money  is  a  commodity,  subject  to 
private  ownership  and  control,  the  evil  of  hoarding 
will  be  present. 


CHAPTER  XI 
LAW  AND  FACTS 

THE  SUBJECT  of  money  is  disposed  of  by  the 
United  States  Constitution  with  extreme  brev- 
ity.    It  is  as  follows : 

Article  1,  Sec.  8.  Clause  5:  The  Congress  shall 
have  power  "to  coin  money,  regulate  the  value 
thereof,  and  of  foreign  coin." 

This  provision  gives  to  Congress  the  exclu- 
sive right  to  do  three  things:  1st,  To  coin  money. 
2d,  To  regulate  the  value  of  money.  3d,  To  regulate 
the  value  of  foreign  coin.  These  three  rights  are  of 
equal  importance.  The  right  of  Congress  to  coin 
money,  and  a  denial  of  that  right  to  the  States  or 
to  individuals,  is  unquestioned.  The  right  of  Con- 
gress to  regulate  the  value  of  domestic  money  and 
of  foreign  coin,  and  a  denial  of  that  right  to  the 
States  or  to  individuals,  is  equally  beyond  question. 

A  proper  construction  of  this  provision  of  the 
Constitution  turns  upon  the  true  meaning  of  the 
words  "regulate  the  value  thereof/'  Thus  far.  Con- 
gress has  acted  upon  the  narrow  and  erroneous 
construction  that  to  regulate  the  value  of  money 
means  to  establish  the  number  of  grains  of  gold  in  a 
dollar;  see  U.  S.  Revised!  Statutes,  Sec.  3511.  If 
establishing  the  number  of  grains  of  gold  in  a  dollar 
regulates  the  value  thereof.  Congress  could,  if  given 
like  authority,  regulate  the  value  of  brass  by  estab- 


Lazf  and  Facts  115 

lishing  the  number  of  ounces  of  copper  it  should 
contain  to  the  pound.  This  would  regulate  the  value 
of  brass,  and  the  law  of  supply  and  demand  could 
be  thrown  to  the  discard.  Although  Congress  as- 
sumes that  prescribing  the  number  of  grains  of  gold 
in  a  dollar  regulates  the  value  thereof,  it  seems  to 
have  realized  the  impossibility  of  regulating  the 
value  of  foreign  coin  in  the  same  way ;  so,  to  its 
mind,  the  following  act  would  accomplish  the  de- 
sire'd   result : 

Tariff  Act  of  August  27,  1894,  ch.  349,  Sec.  25 : 
"That  the  value  of  foreign  coin  as  expressed  in 
the  money  of  account  of  the  United  States  shall  be 
that  of  the  pure  metal  of  such  coin  of  standard 
value  *  *  *  Provided,  that  the  Secretary  of  the  Treas- 
ury may  order  the  liquidation  of  any  entry  at  a  differ- 
ent value,  whenever  satisfactory  evidence  shall  be  pro- 
duced to  him,"  etc. 

This  Act  fixes  a  value  of  foreign  coin,  but 
does  not  regulate  its  value.  On  the  contrary,  the 
proviso  gives  to  the  Secretary  of  the  Treasury  the 
power  to  regulate  the  value  of  foreign  coin.  Al- 
though the  Constitution  empowers  Congress  to  regu- 
late the  value  of  money.  Congress  has  thus  far 
failed  to  do  so.  The  framers  of  the  Constitution  of 
the  United  States  were  not  so  absurd  as  to  assume 
the  regulation  of  a  thing  not  in  existence.  They 
empowered  Congress,  first,  to  coin  money;  and  it  is 
this  money,  after  it  is  coined,  which  is  to  have  its 
value  regulated.  The  meaning  of  the  term  "regulate" 
has  repeatedly  received  judicial  construction. 

"A   power   to    regulate   certainly   implies    a   con- 


116  The  True  Function  of  Money 

tinued  existence  of  the  subject  matter  to  be  regulated." 
54  Mo.  17-34.     72  Tenn.  (4  Lea),  1-13. 

"  'Regulate',  as  used  in  the  Act  of  February  15, 
1877,  *  *  *  means  and  includes  the  power  to  con- 
trol."    16  Neb.,  681. 

"  'Regulate',  as  used  in  Gen.  Incp.  Law,  Art.  5, 
Sec.  1,  cl.  9,  includes  control,  and  hence  it  authorizes 
a  city  to  control  such  streets."  115  111.,  155. 

"The  term  'regulate'  ordinarily  implies,  not 
so  much  the  establishment  of  a  new  thing,  as  the 
arrangement  in  proper  order  of  such  as  already 
exist."    26  Fed.  Cas.,  185-193. 

"I  very  much  doubt  if  anyone  would  contend  that 
by  'by-law'  the  legislature  meant  to  grant  a  power 
to  create. — to  grant  something  new  and  independent 
for  the  welfare  of  the  city.  It  certainly  impresses 
me  most  strongly  that  in  this  sense  a  by-law  is  to  be 
understood  as  the  means  by  which  something  that 
is  already  instituted  or  declared  is  to  be  considered. 
It  is  a  pointing  out  of  the  method  or  the  steps 
beforehand  by  which  the  city  authorities  shall  carry 
out  what  they  have  by  more  solemn  ordinance  al- 
ready declared  should  be  done.  And  I  think  this 
reasoning  applies  with  particular  force  to  the  word 
'regulate.'  Certainly,  the  word  'regulate'  does  not 
mean  to  create  or  ordain."     10th  Atl.,  809-811.     N.  J. 

Eq. 

The  Constitution  of  the  United  States  uses  the 
■w'ord  "regulate"  in  the  same  sense  as  above  in 
clause  3  of  the  same  Sec.  and  Article  as  follows : 
"To  regulate  commerce  with  foreign  nations,  and 
among    the    several     States,    and    with    the    Indian 


Law  and  Facts  117 

tribes,"  and  in  almost  the  same  breath  gives  the 
power  to  regulate  the  value  of  money.  Being  thus 
used  in  the  same  manner  and  at  the  same  time 
and  in  the  same  sense  it  must  be  intended  to  have  the 
same  meaning.  This  meaning  has  been  judicially 
determined  by  the  Supreme  Court  of  the  United 
States : 

"The  power  to  regulate  commerce  comprehends 
the  control  for  that  purpose,  and  to  the  extent 
necessary,  of  all  navigable  waters  of  the  United 
States  which  are  accessible  from  a  State  other  than 
those  in  w'hich  they  lie.  For  this  purpose  they  are 
the  public  property  of  the  nation,  and  subject  to  all 
the  requisite  legislation  by  Congress.  This  neces- 
sarily includes  the  power  to  keep  them  open  and 
free  from  any  obstruction  to  their  navigation,  inter- 
posed by  the  States  or  otherwise ;  to  remove  such 
obstructions  when  they  exist ;  and  to  provide,  by 
such  sanctions  as  they  may  deem  proper,  against 
the  occurrence  of  the  evil  and  for  the  punishment  of 
the  offense."  70  U.  S.  (3  Wall.)  713-724.  93  U.  S. 
9-10. 

Apply  the  law  of  the  above  decisions  to  money 
in  the  scope  and  sense  that  the  court  applies  it  to 
commerce,  and  the  money  question  would  be  solved. 

Money  is  not  a  commodity — that  is,  wealth 
produced  by  individuals  for  the  purpose  of  barter 
and  trade;  but  it  is,  however,  a  governmental  factor 
of  commerce  which,  in  common  with  true  commodi- 
ties, is  subject  to  the  law  of  supply  and  demand.  No 
one  can  successfully  deny  that  a  supply  of  money 
in   excess   of  the    requirements    of    exchange   means 


118  The   True  Function   of  Money 

a  money  of  lesser  value,  while  requirements  of  ex- 
change in  excess  of  the  supply  of  money  mean  money 
of  greater  value.  Money  is,  therefore,  directly 
amenable  to  the  law  of  supply  and  demand ;  and 
whoever  regulates  the  supply  of  money,  that  is. 
the  amount  permitted  to  circulate  at  any  given  time, 
will  be  the  party  who  regulates  the  value  thereof. 
That  money  has  a  very  fluctuating  value  after  coinage 
is  patent ;  and  that  Congress  should  regulate  this 
value  is  evident.  This  it  has  failed  to  do.  Contrary 
thereto,  it  delegates  this  important  Constitutional  func- 
tion to  the  bankers  and  money-lenders,  and  they 
regulate  the  value  of  money  at  will,  and  always 
to  their  own  best  interests,  and  with  a  total  disregard 
of  the  rights  and  interests  of  the  people.  They, 
the  bankers  and  money-lenders,  have  thus  become 
a  co-ordinate  branch  of  the  government,  self-con- 
stituted and  answerable  to  naught  but  their  own 
interests. 

The  value  of  money  can  be,  and  is,  regulated 
solely  by  control  of  the  volume  in  circulation ;  and 
this  control  is,  and  rightly  so,  placed  in  Congress  by 
the  Constitution.  To  enforce  this  right,  the  govern- 
ment must  retain  control  of  the  volume  of  money 
in  circulation ;  and  the  method  for  accomplishing 
this  is  by  the  establishment  of  government  banks, 
thereby  taking  that  control  out  of  the  hands 
of  private  individuals.  This  change  would  cause 
no  confusion  whatever.  Business  would  be  con- 
ducted in  the  same  manner  as  at  present.  The  govern- 
ment would  make  a  charge  for  the  use  of  the  money, 
just  as  the  bankers  do  today ;  but  this  charge  would 


Lazv  and  Facts  119 

not  be  interest  as  now  understood.  It  would  be  an  in- 
direct tax  upon  the  people  for  the  purpose  of  de- 
fraying governmental  expenses.  This  would  do 
away  with  the  present  army  of  tax-gatherers  and 
provide  an  even  and  just  levy  of  taxes  in  proportion 
to  the  amount  of  consumption ;  the  rich,  being 
larger  consumers,  would  justly  pay  a  larger  tax 
than  their  poorer  neighbors. 

This  tax,  levied  by  the  government,  would  be 
paid  back  to  the  people;  while  under  the  present 
system  the  tax  is  levied  by  private  individuals  and 
is  to  be  loaned  back  only,  thus  to  become  a  constant 
and  consuming  debt,  and  for  no  value  received  by  the 
people.  We  are  now  paying  this  tax  to  the  banks 
and  money-lenders  for  the  privilege  of  using  our 
credit,  and  we  must  then  pay  to  the  government 
a  tax  upon  the  commodity  for  which  we  exchanged 
our  credit ;  thus  paying  a  double  tax.  The  tax  thus 
collected  by  the  bankers  and  money-lenders  is  far 
in  excess  of  that  collected  by  the  government. 

Money  is  the  blood  of  commerce,  and  it  could 
and  would,  if  unrestricted,  circulate  through  jhe 
industrial  body,  insuring  good  health  thereto,  just 
as  that  vital  fluid  maintains  equilibrium  in  a  living 
body.  Give  me  the  control  of  the  blood  in  your 
body,  and  I  can  tell  you  to  a  day  when  you  will  be 
very  sick;  I  can  also  tell  you  to  a  day  when  you 
may  become  normal ;  I  can  likewise  tell  you  exactly 
what  you  must  do,  for  me,  before  I  will  permit 
you  to  become  normal.  My  control  of  the  volume  of 
blood  permitted  to  flow  through  your  system  will 
assuredly    regulate   the    value   of   that   blood    to   you. 


120  The  True  Function  of  Money 

The  circumstance  that  you  need  that  medium,  blood, 
in  your  body,  and  that  the  commercial  world  needs 
that  medium,  money,  in  its  body,  must  be  evident 
to    every    thinking    mind. 

The  fact  that  Nature  has  established  a  substance 
to  us  known  as  blood,  with  so  many  red  and  so  many 
white  corpuscles  to  a  given  amount  thereof,  and  the 
fact  that  Congress  has  established  a  substance,  to 
us  known  as  money,  with  so  many  grains  of  gold 
and  so  many  grains  of  silver  to  a  given  amount 
thereof,  go  no  further  than  to  fix  and  establish  what 
these  two  substances  are  to  be.  The  value  of  each 
is  regulated  by  the  flow.  A  normal  flow  of  either 
will  cause  us  to  place  a  normal  value  thereon ;  but, 
curtail  the  flow,  and  their  value  is  immediately  en- 
hanced. All  money  not  in  immediate  use  by  a  citi- 
zen should  be  kept  on  deposit  at  a  government  bank. 
This  would  in  no  way  afifect  his  credit,  as  his 
money,  or  rather  credit,  will  always  be  at  his  com- 
mand, when  he  desires  to  use  it  legitimately.  No 
one  would  be  the  loser  by  this  system.  Each  would 
have  his  account  at  the  bank  just  as  he  has  now, 
and  would  have  that  account  guaranteed  by  the  full 
faith  and  credit  of  the  government,  which  is  more 
than  he  has  now.  He  would  have  the  further  satis- 
faction of  knowing  that  no  private  individual  would 
be  levying  a  tax  upon  him  for  the  use  of  the  govern- 
ment's day-book,  for  private  gain,  under  the  mis- 
taken idea  that  it  was  his  to  do  with  as  he  saw  fit, 
which  is  in  turn  based  upon  that  most  violent  as- 
sumption that  he  had  earned  it.  Furthermore,  the 
depositor  would  be  assured  that  no  private  individual 


Law  and  Facts  121 

could  arbitrarily  refuse  him  the  privilege  of  making 
an  entry  in  said  day-book  to  the  full  extent  of  his 
credit.  Government  control  of  its  guaranties — money — 
and  of  the  tokens  thereof,  is  the  only  solution  of  that 
vexed  problem  of  maintaining  in  circulation  a  uni- 
form volume  of  the  medium  of  exchange.  Under 
these  conditions  anyone  desiring  to  borrow  money 
would  have  his  credit  assessed  by  a  board  of  ap- 
praisers consisting  of  local  appointees,  the  apprais- 
ment  to  be  in  a  fixed  ratio  to  his  assessments  for 
taxation.  Every  board  of  directors  of  a  bank 
is  now  acting  as  a  self-constituted  board  of  ap- 
praisers, and  their  decisions  are  arbitrary  and  un- 
appealable. Safe-deposit  vaults,  and  exportation  of 
money  abroad,  and  all  other  methods  whereby 
money  is  arbitrarily  withdrawn  from  use  by  the 
individual,  must  be  outlawed;  and  all  money  thus 
manipulated  must  be  forfeited  to  the  government. 
To  those  whose  education  and  philosophy  have 
taught  them  a  profound  reverence  for  their  individ- 
ual conceptions  of  those  much  misunderstood  terms 
"vested  rights"  and  "earning  power,"  this  proposition 
will  seem  untenable.  But  that  question  does  not  enter 
here ;  there  can  be  no  vested  rights  in  the  medium  of 
exchange.  Even  though  such  a  thing  could  be 
possible,  the  proposition  is  still  in  no  way  repulsive. 
If  a  man  were  to  construct  a  bludgeon,  no  one  could 
deny  that  he  had,  a  vested  right  in  that  bludgeon; 
and  if  he  sallied  forth  upon  the  street  and  by  a 
dexterous  use  of  it  soon  found  himself  several 
hundred  dollars  to  the  good,  no  one  could  deny  its 
earning  power.     That  the  law  "ruthlessly  infringes" 


122  Tlic  True  Function  of  Money 

these  rights  causes  no  regrets,  save  to  the  owner  of 
the  bludgeon.  "Vested  rights"  should  and  will  be 
protected  as  long  as  they  are  not  used  in  a  manner 
inimical  to  society,  and  their  "earning  power"  will 
be  approved  as  long  as  they  give  an  adequate 
"value  received." 

Conceding,  for  the  sake  of  this  argument,  that 
a  man  could  have  a  "vested  right"  in  the  law  of  the 
land — money — and  also  in  the  functioning  of  that  law, 
— adequate  circulation  of  money, — we  will  find  him  in 
the  same  relation  to  society  that  the  man  with  the 
bludgeon  holds ;  he  uses  his  "vested  right"  in  a  manner 
inimical  to  society,  and  gives  no  "value  received" 
to  compensate  its  "earning  power."  Society  is  the 
sufferer  in  each  instance.  The  only  distinction  is 
that  the  man  with  the  bludgeon  is  not  in  a  position 
to  do  the  colossal  harm  which  lies  in  the  power  of  the 
other ;  he  can  harm  only  one  at  a  time,  and  that  in 
the  dark  and  at  imminent  risk  of  losing  his  life  in  the 
attempt ;  the  other  reaches  all  alike,  on  the  crowded 
thoroughfares  and  in  broad  daylight.  I  state  these 
as  simple  facts  and  without  malice.  The  brightest 
jewel  in  the  diadem  of  reason  is  common  sense. 

The  idea  that  the  banking  business  would  be  a 
disturbing  element  in  politics  if  operated  as  a  de- 
partment of  government  is  a  bugaboo.  The  record 
of  the  other  departments  of  government  refutes 
any  such  fears.  To  say  the  very  least,  government 
employees  operating  the  banks  would  not  be  in  a  posi- 
tion to  "play  favorites"  in  the  slightest  degree  as 
compared  to  the  powers  and  practices  of  the  bankers 
under   the   present    system. 


Laii'  and  Facts  123 

Let  us  reverse  our  reasoning  and  take  the  Post 
Office  out  of  being  a  government  department  and 
place  it  in  the  hands  of  private  individuals,  with  full 
power  periodically  to  increase  or  to  diminish  the 
amount  of  service  available  as  best  might  serve  their 
purpose.  Further :  Let  us  endow  them  with  the 
power  to  refuse  to  any  individual,  and  at  any  time,  the 
right  to  use  the  Post  Office  and  its  service,  not- 
withstanding his  credit  is  perfect,  i.  e.  he  has  plenty 
of  postage  stamps,  and  vice  versa  that  they  can 
grant  all  these  privileges  to  others,  although  minus 
credit — postage  stamps.  And  further :  Let  us 
provide  that  they  can  charge  any  rate  of  postage 
which  the  necessities  for  postal  service  should  im- 
pose upon  the  community ;  in  other  words,  let  us 
turn  the  Post  Office  department  over  to  an  organi- 
zation which  would  be  an  exact  duplicate  of  our 
present  banking  system — and  in  a  short  while  we 
would  all  realize  that  the  change  was  a  disastrous 
mistake. 

The  distributing  of  our  mail  is  not  half  so 
much  of  a  government  function  as  is  that  of  the 
distributing  of  our  medium  of  commerce.  The 
Post  Office  operated  by  the  government  is  a  splen- 
did success,  and  it  would  be  a  gigantic  failure  if 
operated  by  private  individuals  as  our  banks  now 
are.  When  operated  by  private  individuals  the 
banks  are  failures  in  public  service ;  they  would 
be  a  highly  beneficent  success  if  operated  by  the 
government,  and  there  would  be  no  more  danger  of 
political  corruption   than   there   is  now   in   regard  to 


124  The  True  Function  of  Money 

the  Treasury  Department  or  the  Post  Office  De- 
partment. 

Elliott,  in  his  work  on  Usury,  page  182,  says: 
"One  cent  loaned  January  1,  A.  D.  1,  drawing  inter- 
est at  the  rate  of  6  per  cent  compounded  annually, 
on  January  1.  1895,  would  amount  to  $8,497,840,000,- 
000,000.000.000.000,000,000,000.000,000.000.000.  (8,- 
497,840,000  decillions  of  dollars).  To  pay  this  in 
gold,  23.10  grains  to  the  dollar,  using  it  in  spheres 
of  pure  gold  the  size  of  the  earth,  would  take  610,- 
070,000,000,000,000  spheres  of  gold  to  pay  the  debt." 

If  Methusalah  at  twenty-one  years  of  age  had 
loaned  one  dollar  at  6  per  cent,  compounded  yearly, 
that  single  dollar  at  the  time  of  his  death,  nine  hun- 
dred and  forty-eight  years  later,  would  have  grown  to 
more  than  '$977,000,000,000,000,000,000,000.  (977 
sextillions  of  dollars).  Figures  by  McCoy,  government 
actuary. 

Debts  of  the  government,  of  States,  cities,  coun- 
ties, school  districts,  port  districts,  improvement 
districts,  transportation  corporations,  all  industrial 
corporations,  private  mortgages  and  bank  loans, 
amount  to  more  than  $150,000,000,000;  approximately 
$1,500.00  for  every  man,  woman  and  child  in  the 
United  States. — Figures  by  Richardson. 

Virtually  all  this  debt  has  been  accumulated 
in  the  last  fifty  years,  and  each  individual  is  pay- 
ing on  this  sum  to  the  extent  of  his  or  her  consumption 
of  wealth.  This  sum  at  5  per  cent,  compounded 
yearly,  will  double  in  fourteen  and  two-tenths  years. 
In  other  words,  the  people  in  fourteen  and  two- 
tenths  years  will  have  paid  cash,  as  interest,  equal  to 


Laiv  and  Fads  125 

the  debt  and  still  owe  the  debt.  This  money  thus 
paid  as  interest  will  be  re-loaned,  thereby  increasing 
the  debt  to  three  hundred  billions  of  dollars.  In  the 
succeeding  fourteen  and  two-tenths  years,  at  5  per 
cent  compounded  yearly,  this  debt  will  become 
six  hundred  billions  of  dollars.  The  entire  wealth 
of  the  United  States  is,  today,  approximately  $400,- 
000,000,000.— Figures   by    Crammon'd. 

A  farm  mortgaged  for  more  than  it  is  worth 
is  of  no  value  to  the  owner.  A  nation  hopelessly 
insolvent  is  of  no  value  to  its  citizens.  x\ll  those 
who  so  smugly  and  complacently  drift  along  from 
day  to  day,  convinced  of  the  divine  rights  of  interest- 
bearing  debts,  may  well  do  some  computing  with 
the  above  figures.  The  answer  will  be  interesting. 
This  appalling  condition  is  to  be  attained  by  a 
mercenary  few.  through  the  use  of  government 
equipment  (public  property)  for  private  gain.  The 
entire  programme  is  to  be  "put  across"  under  the 
pretense  that  money  is  a  commodity ;  the  while  each 
citizen,  with  a  superficial  understanding  hampered 
with  convictions,  is  to  accept  this  fallacy  as  a  fact. 
No  one  can  deny  the  astounding  accrescent  power 
of  money  under  the  interest  system ;  nor  its  controlling 
power  thus  amassed.  This  power  now  lodges  in  the 
banking  system.  The  bankers  are  human  beings 
engaged  in  business  for  gain.  They  will,  and  they 
do,  use  this  power  for  all  there  is  in   it. 

Thus  far  there  is  apparently  no  argument.  It 
is  not  till  the  question  of  the  right  of  the  banking 
system,  as  now  constituted,  to  perform  the  above 
functions  is  approached,  that  dissension  appears.    The 


126  Tlic   True  Function   of  Money 

great  majority  thoughtlessly  accept  this  right  as 
established.  They  assume  that  money  is  a  commodity, 
a  thing  to  be  privately  owned,  and  traded  and  bar- 
tered at  will,  like  any  other  commodity.  With  this 
point  fixed  in  their  minds,  they  have  no  trouble 
in  applying  the  laws  of  economics,  and  they  emerge 
from  the  controversy  fully  satisfied  with  their  con- 
clusions. The  only  relief  which  they  visualize  is, 
that  by  a  show  of  righteous  indignation,  in  time 
of   stress,  the  system  will  be  moved  to  compassion. 

No  reform,  be  it  ever  so  urgent,  can  be  in- 
augurated under  our  present  system.  Whatever 
the  reform,  if  it  militates  against  the  interests  of  the 
bankers  and  money-lenders,  it  will  result  in  hard 
times.  This  is  not  the  effect  of  the  reform,  as  that 
may  be  of  the  utmost  benefit  to  the  people ;  but, 
as  a  discipline,  the  bankers  and  money-lenders,  hav- 
ing exhausted  every  other  means  to  defeat  the 
reform,  will,  when  once  the  reform  is  in  effect,  with- 
draw the  blood  of  commerce  and  arbitrarily  create 
hard  times.  The  average  citizen,  in  ignorance  of  the 
true  cause  of  the  catastrophe,  will  be  apt  to  blame 
the  reform,  and  wish,  at  the  earliest  opportunity, 
to  return  to  the  old  regime. 

No  nation  can  long  survive  a  condition  where 
a  portion  of  its  people  are  morally  and  intellectuall}- 
pauperized  by  abnormal  wealth,  and  the  remainder 
morally  and  intellectually  pauperized  by  abnormal 
poverty.  Greece,  Rome,  and  Poland  exemplified  this 
fact.  The  danger  of  this  condition  was  foreseen 
by  Abraham  Lincoln.  Near  the  close  of  the  Civil 
War,  Mr.  Lincoln  said : 


Lazv  and  Facts  127 

"  I  see  in  the  near  future  a  crisis  arising  which 
unnerves  me  and  causes  me  to  tremble  for  the  safety 
of  my  country.  The  money  power  of  the  country 
will  endeavor  to  prolong  its  reign  by  working  upon 
the  prejudices  of  the  people  until  all  the  wealth  is 
aggregated  in  a  few  hands  and  the  Republic  is 
destroyed.  I  feel  at  this  time  more  anxious  for  my 
country  than  even   in  the  midst  of  war." 


CHAPTER   XII 
THE  REMEDY 

FIRST  ask  yourself  the  question  :  Why  should  the 
government  be  called  upon  to  pay  a  tax  to  a  few 
private  individuals  for  the  privilege  of  existing 
and  functioning?  and,  why  should  the  producers  of 
the  world  be  held  to  pay  a  tax  to  the  same  individuals 
for  the  privilege  of  producing,  and  also  to  be  sub- 
servient to  their  every  whim  and  caprice?  That  there 
is  no  valid  reason  for  this  condition  is  evident.  The 
following  remedy  will  cure  this  evil : 

1st.  Dispel  the  idea  that  money  is  a  commodity, 
and  as  such  subject  to  private  ownership  and 
control.  The  abandonment  of  this  idea  will  auto- 
matically terminate  hoarding  by  private  individuals 
who    withdraw    money    from    circulation. 

2d.  Preserve  the  present  system  of  banking 
as  a  department  of  government,  the  same  as  the 
Postal  System. 

3d.  Operate  the  banks  as  usual,  both  for  de- 
posit and  circulation ;  the  government  to  charge  for 
the  use  of  the  money  a  tax  sufficient  to  defray  all 
government  expenses. 

4th.  Create  in  the  banking  department  a  Bureau 
of  Assessment  which  will,  by  means  of  local  boards, 
assess  the  credit  of  each  individual  or  concern  de- 
siring  or   using   bank    credit;    the    assessment    to    be 


The  Remedy  129 

conducted  and  levied  the  same  as  assessments  in  the 
present  plan  of  taxation,  and  as  just  and  uniform. 

5th.  Organize  an  Equalization  Board  whose 
decisions  will  be  appealable  to  a  properly  constituted 
court. 

6th.  Provide  a  court  of  ultimate  resort  to  hear 
and  decide  appeals. 

7th.  Make  the  concealment  of  money  in  safe- 
deposits,  or  otherwise,  punishable. 

8th.  Make  the  loaning  of  money  by  private 
individuals,    for    gain,    punishable. 


UNIVERSITY  OF  CALIFORNIA  AT  LOS  ANGELES 

THE  UNIVERSITY  LIBRARY 
This  book  is  DUE  on  the  last  date  stamped  below 


APR2919* 

nrDiMK 

22  itrz 

Mine  ^, 


^*-^ 


tul  X'ri'       ,_ 


^u  mil 

S     3  1 


58  00532  833C 


i^g^ 


UC  SOUTHERN  REGIONAL  LIBRARY  FACILI 


AA    000  987  751    5 


